So Ford runs an ad campaign pitting an all wheel-drive Fusion against a front wheel-drive Toyota Camry and Honda Accord. An invited group of customers scores the Fusion tops in styling, handling, performance and “fun to drive.” Emboldened by Ford’s “dare to compare” strategy, Saturn decides to launch a “Side-by-Side-by-Side Test Drive.” Dealers are instructed to offer customers some seat time in the Aura, Camry and Accord. It’s gutsy! It’s feisty! It’s ridiculous.

First of all, these comparo campaigns are a major mitzvah for Toyota and Honda. As far as public perception is concerned, if Ford and Saturn are working their butts off to prove that their mid-sized sedans are as good as (i.e. better than) the Camry and Accord, then the Camry and Accord must be pretty damn good. These “hey what about us?” ads seal the transplants’ rep as market leaders.

That’s not good. The vast majority of customers are driven by a desire for safety; to buy the product or service that carries the least risk. In their mind, that’s always going to be the market leader. Ask Apple or any other company that’s tried to dethrone the top product in its field: product excellence loses out to massive market share every time.

In fact, the only way to knock a dominant product off its perch is… to knock the dominant product off its perch. In other words, saying your Fusion or Aura is better than a Camry or Accord ain’t gonna cut it— even if they are better. Your only chance of stealing market share from the top dog is to remove the consumers’ feelings of safety. Not to put too fine a point on it, Ford and Saturn have to convince car buyers the Camcord sucks.

Only it doesn’t. Which means this comparo stuff is the marketing equivalent of pissin' in the wind.

Lest we forget, The Big Three used to own the U.S. auto industry. Toyota, Honda, Nissan, VW, Mercedes and BMW came in with better products. So what? The domestic market was Detroit’s to lose. And lose it they did. A few decades of crap products and even worse service literally handed the American car market to the transplants. If GM, Ford and Chrysler didn’t suck in their own right, the transplants would still be nibbling at the margins.

And speaking of automakers that ripped out their consumers’ hearts (and wallets) and stomped on them until their formerly loyal customers RAN to the competition, what are the chances your average consumer is going to trust a Saturn salesman to provide a valid test of an Aura versus a Camry and Accord?

I know, I know: Saturn are the shiny, happy plastic people (well, they used to be plastic). No haggle. Honest as the day is long. But people HATE car dealers; they trust them about as far as they can teleport them (if only).

So, Saturn dude, you’re going to let me drive an identically equipped Aura, Camry and Accord? Uh, no.

According to Saturn’s website, customers can compare an Aura XE with preferred package, a Camry LE and an Accord Special Edition. The list prices are close enough for rock and roll, but just like Ford’s all wheel-drive versus front wheel-drive comparo, we’re looking at an apples vs. pears test: V6 power and optional 17" wheels (Aura) vs. two four-cylinder powerplants with standard 16" wheels (Camry and Accord).

Hmm. Would a customer looking at a frugal four cylinder Camry (21/30 mpg) or Accord (21/31mpg) really cross-shop a four-speed slushbox-equipped V6 Aura (18/28 mpg)? Conversely, would a customer looking for a smooth running V6 really consider a V6 Aura over a six cylinder Camry or Accord just to save a few thousand at the time of purchase (which depreciation would sort out later)? 

Anyway, who can be bothered? It seems self-evident that only the most anal car shopper has the time or inclination to take three test drives in a row– and these are the sort of people who will probably prefer the Camry and Accord for their superior refinement, fit and finish and resale value. 

Even before the Saturn’s side-by-side-by-side goes seriously sideways, Chevy’s making noises about bringing a Camry into their dealerships this fall for a Malibu vs. Camry shootout. Why not the Accord?  It may have something to do with the fact that they’d rather have the new Malibu face the mid-cycle Camry rather than the brand spanking new Accord. 

Detroit would have you believe that these promotions reflect a new, combative spirit. You can almost hear “We’re not gonna take it” echoing off the empty showroom walls. But if you look closely, it’s all just a bit of down market deviousness. TTAC will deploy its test driving team and report back. Watch this space.

Milan is the fashion capital of Italy. Step off the tourist trail and it’s a combination of industrial parks and urban sprawl with only slightly more charm than Trenton, New Jersey. Still, you have got to give Ford’s beleaguered near-luxury division credit for naming their hecho-en-Mexico Fusion derivative after the home of Alfa Romeo, rather than resorting to the alphanumerics afflicting Lincoln’s take on the same model. But the question remains: is Mercury’s glammed-up Fusion a credible fashionista or an industrial waste?     

In 1993, Toyota began developing a radical gas-electric hybrid vehicle called the Prius. With gasoline at historic lows, internal company documents gave the concept a five percent chance of commercial success. In May 2007, the Prius was America's sixth best selling passenger car, with 24k units. Toyota also just passed the one-million-hybrids-sold milestone. Toyota deserves a raspberry for the worst internal forecasting ever, and an award for one of the most successful new-car launches in automotive history.

Needless to say, the Prius' success is not without controversy. The Japanese hybrid has a more polarizing influence on pistonhead opinion than any other vehicle made save its philosophic nemesis, the Hummer H2. Compare the gas-swilling in-your-face Hummer's rumored demise with the Prius' rise up the sales charts, and there you have it: a snapshot of American's shifting priorities.  

You also get a glimpse of Toyota's branding expertise. While the Japanese automaker continues its assault on the domestic pickup truck and SUV market (creating much of the animus alluded to above), the Prius is still a perfectly defined product within Toyota's existing brand identity: reliable frugality.

The Prius is such hit that it's now a household name; consumers interchange the word "Prius" with "hybrid" in the same way that they ask for a Kleenex. The last automotive product to pull that off was the Jeep– some fifty years ago.

Toyota's 80 percent share of the total U.S. hybrid market has had the Xerox effect on its competitors. Their hybrids are either flying beneath the radar (Nissan Altima hybrid), eating crumbs off Toyota's table (Ford Escape and Mercury Mariner hybrid) or retreating from the field of battle (Honda Accord hybrid).    

Honda's move comes despite the fact that the company's Insight hybrid was first to market in 1999. While Honda will continue to fight for gas-electric market share with their "mild" hybrid Civic, they're putting their high-efficiency eggs in two new baskets: a new Fit-class hybrid and clean diesel engines for their existing model range.  

Pundits often argue that Toyota stole a march on its competitors by creating a hybrid with unique sheetmetal (as opposed to hybrid-powered versions of existing products). Well, the Prius has had such a dramatic halo effect that consumers now associate the technology with Toyota's entire lineup. Hybrid Camrys are currently outselling hybrid Civics by 50 percent.

Toyota's success with the technology has forced all the other global players to put their nose to the hybrid-powered grindstone. Mercedes and BMW bought into GM's sophisticated (read: expensive) two-mode hybrid drive. Buyer's remorse may be setting in; the Germans are now focusing on developing their own mild-hybrid technology.

The shift reflects a realization that competing with Toyota mano-a-mano with full hybrids is a sucker's bet– especially as the Prius v3 looms. (Toyota is targeting a 20 percent efficiency gain.) The other factor is simple cost-effectiveness. Mild hybrids yield a greater return on investment.

Whereas a full hybrid demands a [ballpark] $2500 production premium, micro and mild hybrids start at $700. When combined with other technologies such as direct injection and full valve control, the mild hybrid seems a far safer proposition. BMW's revised 1-Series– complete with start-stop engine management, valve control and direct injection– shows a 20 percent fuel efficiency improvement over its predecessor.

In short, Toyota's competitors are hedging their bets, looking for less risky across-the-board fuel efficiency solutions.

The market is bi-furcating: "real" hybrids (which the market increasingly interprets as Prius/Toyota) and micro/mild hybrids (traditional models sold on their over-all moderate efficiency gains, rather than "gee whiz" technology).

And where does this shifting market leave Toyota? Dual propulsion, full-speed ahead!

Despite the fact that Highlander Hybrid sales are down 23 percent year-to-date (just over 3k units in May), the company has publicly stated that every one of their models will have optional Hybrid Synergy Drive within a few years. They've also committed the company's vast technological resources and production expertise to reducing the cost of their hybrid system by some 50 percent.

Toyota is playing a powerful hand. If they can achieve their cost-reduction target, they'll be selling more sophisticated (and more efficient) full hybrids at roughly the same price as the rest of the industry's mild hybrids. And if Prius v3 is significantly more efficient than its predecessor, the model will maintain its role as Toyota's hybrid halo-bearer.

In any case, the Prius is now a fully fledged four-wheeled corporate emblem. And Toyota has announced a family of Prii, including a station wagon and a smaller city car. The hybrid pro-con arguments can go on endlessly in their (internet) vacuum. Toyota took a huge gamble with the Prius. It's paid off at the bottom line, and looks set to do so for many years to come.

Once upon a time, American stage magicians would assume Indian-sounding names, don turbans and claim to have mastered the mysteries of the Indian subcontinent. Automaker Mahindra & Mahindra (M&M) looks set to revive the country’s rep for astonishing feats. While industry pundits are busy anticipating Chinese automotive exports, M&M are about to sell their products stateside, preparing to enter America’s value-for-money, entry-level market. Will it be magic or a massacre?

Ironically enough, the brothers Mahindra got their start by adapting an American product to the Indian market. After WWII, they set up their namesake company to franchise Willys Jeep production for India’s surface-challenged roads.

Mahindra & Mahindra eventually dropped their American partner, built their own SUV and expanded into light duty trucks, three-wheelers and pickups. The company now operates eight Indian production facilities, 49 sales offices and 780 dealers.

Last year, the Indian conglomerate– including telecoms, financial services and property development– banked roughly $39b in revenues. (For comparison, BMW’s revenues for the same period were around $64b.) In recognition of their size, solidity and importance to the Indian economy, Mahindra & Mahindra is set to replace motorcycle maker Hero Honda Motors on the Bombay stock market’s 30-stock sensitive index (a.k.a. Sensex) in July.  

M&M may be a force to be reckoned with in India, but Automotive News ranks them number 34 on their list of global vehicle makers. All in, Mahindra produces fewer vehicles per year than Ford [still] sells F-150s. No wonder many auto analysts have discounted the Indian tiger’s chances of successfully cracking the world’s largest automotive market– especially when weighed against the aspirations of the Chinese dragon.

Yes but– China’s joint partnerships remain focused on the epic struggle for market share within their friendly neighborhood military dictatorship. Meanwhile, M&M is gearing-up for international expansion.

Earlier this year, Mahindra joined forces with Renault / Nissan to build India’s largest automotive production facility. The Indo – French operation is a flexible factory, looking to produce 50k vehicles this year. M&M claim the plant has sufficient capacity to increase throughput to 400k vehicles per year.  

Two weeks ago, the automaking duo released a local version of Renault’s “world car.” It’s unclear how the Logan DLE 1.5-liter dci will fare against the almost identically powered industry leader, the Ford Fiesta 1.4-liter Duratorque ZXI. But the 547,064 IDR ($13,476) Logan undercuts the popular Ford by around 90k IDR ($2217). In a country with a $979 annual per capita income, that’s a compelling difference. 

The cut-price Logan may well join Mahindra and Mahindra’s Scorpio as another value-priced product doing battle outside its home market.

Five years ago, Mahindra began selling their diesel and petrol-powered SUV to Malaysia, South Africa, Russia, Italy, France, Spain, Portugal and Western Europe (where it’s known as the Goa). Sales and reviews have been strong; the vehicle is now in its second generation, complete with a Lotus-tuned suspension. M&M believe the Scorpio and its derivatives are ready to fulfil their American ambitions.

The Indian carmaker is no stranger to the U.S. market. After severing an eight-year franchise agreement with International Harvester in 1971, Mahindra and Mahindra began building their own line of tractors. In 1994, M&M started selling farm machinery in the United States.

With US assembly facilities in Tomball, Texas and Calhoun, Georgia (and a third site under construction), the company estimates it will sell 10k tractors this year. And M&M is no cheapo tractor builder. In 2003, their U.S. ops received the Deming Application Prize for Total Quality Management; the only tractor company to achieve this honor.

To sell their automotive products stateside, Mahindra turned to Global Vehicles. The Georgia-based company is notorious for trying– and failing– to import the Romanian-built Cross Lander. Global v2 says they’ve sold 160 Mahindra dealerships for $125k apiece. They’re looking to add another 340 M&M dealers by the end of this year, with sales starting in early to mid ’08.

Last month, 500 potential M&M dealers gathered in Atlanta to see the Indian automaker’s five-model U.S. line up: a two-door pickup, two four-door trucks and two five-door SUVs. 

Mahindra’s expected to price these products in the low 20’s. Their SUV will butt heads with Hyundai’s Tuscon ($17k – $22k) and Kia’s Sportage ($16k – $22k). Unless the Indian machines bring a raft of standard features and a matching warranty to the party, it’ll be an uphill battle. M&M’s small pickup will encounter far less resistance, as American and Japanese automakers have neglected and/or abandoned the segment.

M&M’s secret weapon: diesels. All five US products will offer an optional diesel engine. Renault’s oil burners are some of one of the best in the biz: torquey, smooth and frugal. If Mahindra found a way to make their diesel powerplants U.S.-compliant, their products will find a ready audience, and establish a beachhead in the world’s most competitive automotive market. Now THAT would be some trick.

You heeded our call. You nominated the cars you considered the best of the best. Without fear or favor, TTAC’s tenacious tribe of telic keyboard tappers selected twenty vehicles from your list of over a hundred superlative automobiles. You voted for 10 of them, creating our first annual Ten Best Automobiles. The voting was often extremely close, but the end result was never in doubt: a selection of ten automobiles that any self-respecting motorist would be proud to own, and delighted to drive. Ladies and gentlemen, raise your tea mugs as I present to you: TTAC’s Ten Best for 2007.

Car-based crossovers (CUV's) are America’s SUV escape pod of choice. Domesticated SUV’s from Nissan, Toyota, Honda, Ford and more have found favor, as have their upmarket homonyms. Although GM was late to the crossover party, the GMC Acadia and Saturn Outlook are (at least for the moment) highly competitive products. At the top end, Cadillac stands pat with its three-year-old SRX. For '07, Caddy’s attempted to re-invigorate their CUV with a new interior.

Current Corporate Average Fuel Economy (CAFE) standards dictate that U.S. automobile manufacturers must produce vehicles whose overall average achieves 27.5 mpg (for cars) and/or 22.2 mpg (for trucks). The regulation’s stated goal: “encourage” manufacturers to build more fuel-efficient vehicles and, therefore, somehow, eventually, “lead” American consumers into buying same. Yeah right.

Generally speaking, people don’t buy what’s good for them. Whether it's cigarettes or SUV’s, people buy the products they want and then rationalize their purchases afterwards (if they can be bothered). CAFE’s underlying principle– forcing manufacturers to build products people don’t want– is a very special kind of lunacy, normally reserved for “planned economies.” And it’s about as effective as it sounds.

By the same token, trying to force consumers to buy something they don’t want (for their own and the planet’s good, for example) instead of something they do want (even though some supposedly smarter person says they shouldn’t) is about as sensible as herding cats. Social pressures and “education” will only take you so far, and no further.

In practice, CAFE regs are even worse than they are in theory. Raising mpg average numbers seems noble enough– until you devil into the details. Even a brief examination shows that the manufacturers have used their political clout to rig the system.

The end result: Honda, Toyota, Nissan, etc. have all figured out how to create fuel-efficient cars that people willingly buy and drive, while the Big 2.5 ain’t got game. The CAFE regs failed to force them to do so.

Gasoline prices, however, have focused Detroit’s mind wonderfully. Thanks to pump price escalation, Detroit must now listen to the U.S. automotive market and build what it demands– or go belly-up. Again, this new reality has nothing to do with previous, existing or future CAFE legislation.

In fact, let’s imagine a CAFE-free world. With gas heading up past three bucks a gallon, it’s easy to suppose that a large number of people would voluntarily choose to abandon their luxobarges in favor of a more frugal set of wheels.

While those who can afford five dollar a gallon gas and/or depend on driving a HD truck or SUV for their livelihood would stay with their big rigs, the rest of us would transfer to rides that conserve our cash.

But what if gas prices crash? There’s an accepted legislative methodology for discouraging the consumption of products judged injurious to society: sin taxes.

Hiking up the cost of alcohol, cigarettes, gas guzzlers, etc. through taxation [supposedly] prices consumers out of the forbidden fruit market. Considering the power of addiction, it’s a policy that tends to be more revenue than results positive. But it’s about as good as it gets.

If we want to curtail sales of gas guzzlers, we should immediately abandon all federal regulations concerning fuel economy and slap on a big old federal gas tax. That, however, would hit everyone – rich and poor alike – in their wallets. The only thing politicians hate more than missing an opportunity to regulate something is getting caught with their hands in your wallet.

Instead of focusing on nit-picking laws and regulations, what about actually solving the environmental and national security problem inherent in our gas-powered society by switching to alternative fuels? You know, launch some sort of Manhattan project that changes our automotive infrastructure from oil-based fuel to corn or sawgrass 'shine?

As this website has argued before, federal alt fuel initiatives are proof positive that you can create more pollution and political turmoil and greenhouses gasses by trying NOT to use gas than you can by using it. Government interference in the E85 industry– from CAFE credits for vehicles that will never touch a drop of corn juice to federal corn subsidies– are nothing more than lipstick on a pork barrel.

While I dream of hydrogen-powered cars, I don’t want my tax dollars poured into national hydrogen research, production and distribution. If you thought the reconstruction of Iraq was riddled with corruption, can you imagine the billions that a hydrogen-power project would waste? And for what? To shift national energy consumption from pump to plant?

The free market is the answer. If E85, plug-in hybrids or hydrogen fuel cell cars pay, they play. If manufacturers want to build jumbo SUV’s in times of high fuel prices, they’ll increase SUV fuel efficiency. If they can’t, American consumers will migrate to more efficient vehicles all on their own. If not, a tax at the tap will jolly them along. If there’s no political will for that solution, so be it. Last time I looked, it wasn’t the government’s job to impose its will on the people.

In short, there’s no need to set some arbitrary limit on the fuel economy of new vehicles. It’s time for CAFE to go.

In the Phantom Menace, Anakin Skywalker stands in front of the Jedi Council. Master Yoda senses that Skywalker’s fear of losing his mother is clouding his mind. “Fear is the path to the dark side,” Yoda pronounces. “Fear leads to anger. Anger leads to hate. Hate leads to suffering.” And there you have it: the story of the merger between Daimler-Benz and the Chrysler Corporation. Witnessing much suffering, we are.

Like Anakin, every Daimler-Benz CEO has been afraid of losing his metaphorical mother. In other words, they’ve been scared that Daimler-Benz will fall prey to a hostile takeover. In 1984, Daimler-Benz CFO (and later CEO) Edzard Reuter decided that the only way to keep Daimler-Benz independent was to grow to the point of indigestibility.

At the time, Daimler-Benz had huge cash reserves. They could have easily survived a complete failure of one or two new model lines. But Reuter believed that the market for Daimler-Benz products wasn’t big enough to accommodate poison pill-scale growth. So he decided to diversify.

Reuter mined Daimler-Benz’ cash mountain to buy numerous aerospace and technology corporations. Unfortunately, his acquisitions were bottomless pits. Reuter burned so much cash during his regency that Daimler-Benz’ 1995 stock price had fallen 12 percent since the fateful day he’d assumed control in 1987– despite a wildly successful Mercedes brand.

In 1995, Reuter floated away on his golden parachute, creating corporate lebensraum for his successor, Jürgen Schrempp.

Schrempp soon sold every major business that wasn’t part of traditional automaking. When he finished de-acquisitioning, Daimler-Benz was exactly where it was ten years earlier, only poorer.

By this time, the global car industry was in the throes of massive consolidation. BMW, GM and Ford were buying-up once storied marques. FIAT was on the ropes. Toyota’s epic growth was continuing. Industry analysts were predicting that the international automotive market could only sustain five independent car manufacturers by 2005.

And then Deutsche Bank, Daimler-Benz’ long-time majority shareholder, announced it was dumping its stake in the German automaker. If Yoda would have been present, he could easily have sensed the fear within Schrempp.

Schrempp decided that Daimler-Benz had act upon of the old Italian saying: il pesce grande mangia il più piccolo. Daimler-Benz had to eat someone else not to get eaten.

Honda topped the list. Still smarting from its ill-fated tie-up with Britain’s Rover Group, the Japanese automaker was deaf to Schrempp’s overtures. So Schrempp started negotiations with/for Chrysler.

At the same time, Ford approached Daimler-Benz about a possible tie-up. When the Ford family made it clear that a takeover (Ford over Daimler-Benz) was the only acceptable scenario, Schrempp pulled the plug on the negotiations. After all, Chrysler had announced “game on.”

Daimler-Benz paid $36b for the American automaker, called it a merger of equals (a.k.a. “a wedding in heaven”) and breathed a sigh of relief. They singularly failed to notice a disturbance in the force.

One year later, on March 10, 1999, it all started to go downhill. That was the day DCX’ Board of Directors rejected DaimlerChrysler’s plan to take over the world Nissan. Schrempp wanted it. Nissan wanted it. But Schrempp was too afraid unable to push his plans through the Jedi Council DCX’ Board of Directors. 

Renault ended up buying Nissan. Under the leadership of Carlos “The Slasher” Ghosn, the two companies formed the most successful merger in recent automotive history. Schrempp was left shaking his head, knowing that Nissan could have provided Chrysler with the high quality small cars it needed for the U.S. market (a task now left to DaimlerChrysler’s less-practiced Chinese partners).

Still hungry for a Japanese partner, DaimlerChrysler bought Mitsubishi, a wounded manufacturer with plenty of production problems. This decision lead to the second important date in the history of DaimlerChrysler’s failure: April 22, 2004.

On this fateful day, Daimler-Chrysler’s Board of Directors decided to end any further financial help for its ailing Mitsubishi brand. Schrempp had staked his reputation on making Mitsubishi work. It needed a massive cash infusion. But the force was weak with that one.

After the Board’s rejection of his request, Schrempp’s days were numbered. By the end of 2005, he finally stepped down, taking with him the grand global “vision” that was supposed to fuel the Daimler Chrysler merger.

By the time this epic episode faded to black, DaimlerChrysler’s stock price stood at sub-‘95, (pre-Schrempp) levels. Now it’s Dieter Zetsche’s turn to clean up the mess that Schrempp left behind. And when he’s finished, Daimler-Benz will be where it was 10 years ago, only poorer.

According to the official numbers, CEO Reuter and Schrempp’s delusions of grandeur successful attempts to prevent a Daimler-Benz takeover burned through some $60b of Daimler-Benz’ money, although the unofficial estimate place the amount as high as $120b. And it ain’t over yet.

Let’s just hope Dr Z is not afraid.

The hybrid hype has finally reached Detroit. This fall, the gi-normous GMT900-based GMC Yukon (a.k.a. the Chevrolet Tahoe) will offer optional dual-mode hybrid engine technology. Next year, Chrysler will follow suit with a hybrid Durango/Aspen. Both automakers promise 25 percent better mileage on the highway. Chrysler is claiming a 40 percent increase in the city. GM promises a 25 percent urban gain. Happy days are here again! You’ll soon be able to have your SUV and afford to drive it too! And cool the planet! Or, you know, not.

While the idea of a full-size hybrid SUV may send California’s Governator into a muscle flexing frenzy, one doesn’t have to read too carefully between the lines to see the abject futility of this venture. Let’s crunch a few numbers.

According to our friends over at the Environmental Protection Agency (EPA), the Yukon/Tahoe twins burn gas at the non-PC pace of one gallon every 16 miles in town, and once every 21 miles on the open road. Chrysler’s most efficient V8 uses gas at a buttock-clenching 14/19 mpg. 

To fix this sales sucking situation, GMC and Chrysler have equipped their big rigs with Prius-like (though proprietary) dual-mode hybrid technology. At low speeds and light loads, the hi-tech SUV’s can move forwards (or backwards) via electric power, internal combstion or some combination thereof. At high speeds or heavy loads (i.e. drag racing with a bass boat behind), the hybrid's batteries assist the engine. Add regenerative brakes and displacement-on-demand cylinder deactivation and away you go.

Surely all this ground-breaking technology will provide significant efficiency improvements and fuel cost savings. I don’t know about you but I’m thinking, what, mid to high 20’s? That kind of improvement might even give the SUV genre a new lease (five year loan?) on life. No sir.

For those of you who haven't done the math yet, the hybridified GM and DCX SUV’s are set to eke out a paltry 19-20mpg. And that’s city driving, where hybrids typically shine.

The enemy, of course, is weight. Just as you can’t make a silk purse out of a sow’s ear, you can’t turn a gas hog into silk pajamas (or something like that). Although GM is retrofitting the hybrid Yukahoe with aluminum components to compensate for 300 lbs. of batteries, it’s more or less a wash. The SUV’s will still weigh in at nearasdammit 5000 lbs. (or more depending on drivetrain).

Bottom line: a 25 percent improvement on not much ain’t a whole lot. But it is something, right?

“We have to think hard about the consumer who buys vehicles like the Dodge Durango and the Chrysler Aspen,” prevaricates Mark Chernoby, who’s just one letter away from having the world’s worst name for a VP of Advanced Vehicle Engineering. “These are people who want to have hauling capability.”

OK, but how many people who really need 8900 lbs. of towing capacity are gonna fork out a bunch more money for a vehicle offering few more mpg’s– especially when there's a lot full of heavily discounted non-hybrids lazing around?

Yes, here we go again: the “hybrid premium.” Forking out a couple of thousand bucks extra for hybrid tech has got to be pretty low on your average SUV buyer’s “to do” list. Buyers who previously owned full-sized SUV’s as status symbols (and got religion down at their local pump ‘n pay) have either left the genre already or can’t wait to do so. And any Chevy, GMC, Dodge or Chrysler dealer who thinks he’s going to see Prius drivers wheeling into his lot to trade-up to a hybrid SUV is plumb crazy.

It’s no surprise that the domestic automaker’s first serious hybrid offerings have arrived in SUV form. SUV’s are cheap to build, the factories and suppliers are already in place and they’re the automakers’ highest profit product. Besides, genuine clean sheet designs are extremely expensive and risky propositions. Better to stick with what you know. 

But American consumers will quickly see that boosting SUV gas mileage by 25 percent is nothing more than porcine lipstick application. If gas prices crest four bucks a gallon this summer, this insight will only require of femtosecond of consumer decision making. The odds that gas prices will trend downwards enough to lure large numbers of SUV buyers by the fall, when GMC unleashes their hybrids, are smaller than the Honda Fits, Nissan Versas, Toyota Yari and Chevrolet Aveos many of SUV refugees are now driving (no, really).

By the same token, Chrysler will enjoy the privilege of watching GMC fail to sell their hybrid Yukahoes before they open the gates on gas – electric Aspangos. Perhaps DCX (or whomever) will learn by example and not spend precious advertising and marketing resources on this ill-advised makeover. Maybe they’ll build a hybrid-powered 300C instead, to help revive that line’s flagging sales. Who knows? Maybe gas pigs can fly.

When it comes to full size pickups, three words have dominated headlines over the last six months: Toyota, Toyota, Toyota. Can the Tundra penetrate the Big 2.5’s final sanctuary? Who will crumble first, GM or Ford? It’s made in Texas! Yada, yada. But Toyota’s not the only American-made foreign brand playing in the full-size pickup truck sandbox. Nissan was here first and they’re not going away. So can this Mississippi Titan play ball or is it destined to remain a third-string niche player?

In 1996, the Toyota Camry was about to become America’s best-selling car. To protect the Taurus’ five year reign, Ford ramped up sales to Hertz Rental Car. The strategy worked– for a year. Despite the catastrophic effect on the Taurus’ resale value and image, despite selling off Hertz, Ford still relies on fleets to maintain economies of scale. As do the rest of The Big 2.5, who use fleet sales to mop up extra production, earn new money for old rope and blow out their sales stats. While Detroit knows fleet sales are slow motion suicide, their moves to curtail the practice are not as convincing as they could– or should– be.

That’s because the fleet market’s a double-edged sword. Again, fleet sales keep factories humming– plants whose restrictive union contracts make running them less expensive than not running them. Fleet sales also enhance cash flow and prop up quarterly numbers. On the other hand, selling hundreds of thousands of cars at or below cost throws retail residuals off a cliff, destroys the perceived value of a product and gives a false impression of how well both car and company are doing. 

Over the last few years, The Big 2.5 have all admitted the truth of that equation. They’ve publicly declared their intention to wean themselves off the “easy money.” GM claims they’ve trimmed their fleets sales over the last two years, walking it down by 11.2 percent. Although Ford and DaimlerChrysler have also promised to follow the same path, they haven’t. In that same two-year window, Ford’s rental sales have increased 12.3 percent. DCX’ fleet sales have climbed by a staggering 35.3 percent. And it’s getting worse.

From September 2006 to February 2007, Chrysler (division) offloaded 48.5 percent of its total sales to the fleets, while 32.1 percent of The Dodge Boys’ sales went to the same market. And even though GM overall has cut back on fleet sales, 44.9 percent of Pontiac’s and 29.6 percent of Chevrolet’s total sales ended up in fleets. Ford (the division) off-loaded fully one-third of their total sales to the fleets, with half of that number going to rental companies.

If you deduct fleet sales, Chrysler (division) sold just 147K vehicles over the last six months– which ain’t great but sure beats Pontiac’s 96K retail units. Subtracting fleet action, Chevy’s sales drop to 742K. The math also reveals that Ford (division) placed just 676K vehicles into retail customers’ hands. With this many vehicles still flowing into the fleet market, destined to reemerge at auctions, Chrysler, Pontiac, Chevrolet and Ford will have a tough time convincing retail customers to pay full whack for vehicles facing epic depreciation.

Detroit “gets it” but can’t quite “kick it.” For example, the Pontiac G6 (GM’s fourth best selling car) is now flooding the fleet market. According to Jim Hall, AutoPacific’s VP for industry analysis, GM is trying to replace the Chevrolet Malibu’s fleet sales with the G6. The goal: resuscitate the Malibu’s residual values ahead of the refreshed model’s launch. “You don’t want a brand new model to lose money in resale."

At the same time, Chrysler’s used the fleet market to divest itself of an embarrassment of 2007 Town & Country minivans and Sebrings, and disappear that pesky sales bank that attracted so much media and stockholder attention. But the mid- to long-term effect of Chrysler’s used car tsunami cannot be avoided, either by current Chrysler owners or the corporation itself. 

All that said, The Big 2.5 ARE, however haltingly, cutting back on fleet sales. And the imported and transplanted automakers are taking up the slack. Kia’s fleet sales are up 60 percent over last year (the Optima is proving especially popular with rental agencies). Nissan reports a 45 percent increase in its fleet sales, while Toyota’s contribution to airport rental lots and other fleet repositories is up by 30 percent. 

In case you’re thinking the newbies are headed for a fleet enema to rival The Big 2.5’s, Kia promises to restrict fleets sales to 12 to 15 percent of total ‘07 sales. Nissan won’t allot more than eight percent of its overall sales to fleets, with a maximum of 10 percent of any given model’s sales destined for that end. Toyota says they’ve never sold more than nine percent of total U.S. sales to fleets, and never will.

Flexible factories are the best way to solve The Big 2.5’s production vs. demand dilemma without the cost of shutting down hugely expensive assembly lines. Yet Detroit’s maddening bureaucracy, older plants and less-than-flexible workforce make implementing that approach… problematic. This leaves The Big 2.5 in a bad place: they’re damned if they do, and damned if they don’t. To paraphrase Oscar Wilde, when it comes to fleet sales, Detroit can resist anything except temptation.

So here we are, trying to convince American motorists to abandon their SUV’s for smaller, more fuel-efficient vehicles, to do their bit to reduce global warming and eliminate the need for messy military entanglements. And along comes a scientific study from a reputable independent organization that concludes that you’re safer in an SUV than a passenger car. Nuts.

You remember that debate, don’t you? Back before carbon dioxide was a planet killer, before hurricane Katrina sent the price of gas soaring, before the Iraq war got old, the anti-SUV crowd focused their attention on safety. They highlighted the “us vs. them” SUV vs. car death match, where the guy with the morally indefensible vehicle won the right to play again. Which was unfair but true. And still is.   

Last Thursday, the Insurance Institute for Highway Safety (IIHS) released the results of a study examining death rates for drivers of 2001 to 2004 model year vehicles involved in crashes from 2002 through 2005. The results were rated by deaths per million vehicle years (DMVY).

The IIHS’ separated the vehicles into eight categories: cars, sports, luxury, specialty, station wagons, minivans, SUV’s and pickup trucks. The “deaths by body style” stats were conclusive. According to the report, large and mid-sized 4WD vehicles (47 and 59 DMVY) are safer than cars classified as mini (148), small (103), midsize (71), large (81) and very large (61).

The IIHS report also listed the vehicles with the highest and lowest driver death rates. Of the 16 “worst” vehicles rated, cars occupied 12 slots, while SUV’s garnered four places on the list (a 75 / 25 percent split). Of the 15 “best” vehicles, five cars (33 percent), seven SUV’s (47 percent) and three minivans (20 percent) made the grade. 

That said, the IIHS study rated both small and very large SUV’s appreciably more deadly than mid-sized and large SUV’s. And there are as many ways to spin interpret the IIHS data as there are media outlets happy to avoid the logical, distinctly non-PC headline “SUV’s Safer than Cars.”

CBS News compared the "death rates in passenger vehicles with similar weight" and came to a different conclusion: "Cars Still Beat SUV's In Safety." The Detroit News report avoided any SUV vs. car comparisons. Reuters touted the Ford F-150’s huge safety gains. Consumer Reports focused on the importance of driver behavior, rather than vehicle design: 

“Care should be taken when evaluating this data because there are driver factors (such as demographics and region) that might greatly affect the fatality rates per model. We believe models that appeal to a more careful driver tend to have a lower fatality rate than those that attract a more risk-prone driver.”

While it's easy to understand how the Nissan 350Z made it on the IIHS black list, it’s hard to think of Kia drivers (Spectra fourth, Rio sixth) as “thrill seekers.” No, the simple, unavoidable, inconvenient truth is that both the pro and anti-SUV campaigners were right: physics rule the day.

Corroboration comes via the National Highway Traffic Safety Administration’s (NHSTA) 2005 crash stats. Measuring driver fatalities in all types of crashes, SUV's were 5.2 percent safer than passenger cars. And it’s no fluke. In 2003, SUV’s out-protected cars by 5.3 percent. In 2004, the figure climbed to 6.1 percent. In 2005, it rose to 6.6 percent.

Again, there are many ways to interpret the data. If you measure non-driver fatalities, or rollover crashes, the picture changes. But there’s plenty of evidence to confirm what common sense suggests. In 2005, SUV occupants were twice as safe as passenger car occupants in front, side and rear crashes. 

The safety gap is bound to widen. Thanks to rising gas prices and changing consumer tastes, inherently dangerous jumbo-sized SUV’s are either history (e.g. Ford Excursion) or fading fast (e.g. Chevrolet TrailBlazer). Buyers of full-sized SUV’s are migrating towards smaller, lower riding and safer car-based SUV’s (a.k.a. CUV’s). And NHTSA legislation mandating electronic stability control in all SUV’s will yield significant safety gains. 

None of this is good news for environmental campaigners, most of whom favor government intervention to “persuade” Americans drivers to exchange their SUV’s for small, frugal and more dangerous vehicles. Still, one should never underestimate the zealot’s power to surmount scientific results. If SUV’s were outlawed, there wouldn’t BE a safety gap. More people will die from global warming than small car crashes. Etc.

To a certain extent, the pro-conservation, anti-SUV crowd has already won this debate, as witnessed by the fact that so few media outlets are willing to raise the safety vs. fuel economy issue. Well, consider it raised.

[Click here for IIHS report or here for USA Today's simplified chart.]

In a recent study of new vehicle owners, Ford products came second in "overall initial vehicle quality." According to Ford's PR release, Honda took the top slot, while Toyota and Nissan tied Ford for second (although Toyota actually beat Ford by three points). Yes, well, it turns out The Glass House Gang paid for the report, which mirrors the format of J.D. Power's Initial Quality Survey (IQS) without reproducing the results. Last year, JD's mob ranked Ford fifteenth in Initial Quality, one place beneath the industry average, nine places behind Honda and eleven places behind Toyota. Anyway, who cares?

Define quality. Is it design, durability, longevity, reliability, fit and finish, snob appeal, something else or a combination of these factors? How do you– or should I say "one"– calculate the relative importance of any particular attribute? Is reliability really the sine qua non of quality? Is longevity more important than fit and finish? Given the subjectivity of the term, it's virtually impossible to determine a vehicle's intrinsic "quality."

Back in the ‘70's, slipshod assembly, dubious dynamics and instant rust were the status quo. Any car good enough to win a quality award stood out from the crowd. Today's cars are the best-assembled, most defect-free, longest-lasting vehicles ever produced. Claiming a car rolling off one assembly line is higher quality than one coming off another assembly line is like claiming the Pacific Ocean will make you wetter than the Atlantic.

While pistonheads tend to fixate on minute differences between vehicles, the majority of the public are well aware that current mainstream motors offer roughly similar looks, performance, mileage, packaging, reliability and safety. Strictly speaking, Ford and other mass market automakers are selling mediocre products. To cut through the clutter and create a reason to buy one loaf of white bread over another, manufacturers use IQS studies to proclaim they're offering higher-quality mediocrity than the competition.

Quality is supposed to be a differentiator, something that shows that one item is superior to another in one or more aspects. The Ford-financed survey– and Detroit's continual harping about "the perception gap"– reflects the fact that many manufacturers don't get it. They're still stuck in the "Hey, give us a chance! We're just as good as the other guys now!" mentality. When the average person determines whether or not a vehicle is a quality product, they're not looking for "as good as." They're looking for "the best."

To achieve that, today's automakers must produce profound reliability AND sweat ALL the small stuff. Our reviewers have been continually criticized for continually criticizing the quality of a given car's plastic surfaces. Yet the look, feel, shape and smell of a vehicle's polymer's reveal a great deal about its overall quality. Just by prodding the dashboard, even a layman can tell if he or she's sitting in a beancounted beater or an upmarket luxobarge. Same goes for closing a door, or listening to the radio, or pressing the gas pedal.

Yes, it's a challenge to create the highest possible quality at a specific price point. But that's the challenge all automakers face. And in today's hyper-competitive automotive market, there's simply no margin for error. MINI's IQS scores took a beating when they introduced the car without cupholders. Many pundits asked, has it really come to this? Yes, it has.

Anyway, if automakers were truly interested in determining the quality of their products, they'd survey owners long after the new-car honeymoon had ended. They'd ask for feedback on reliability, fit and finish, repairs, out-of-pocket expenses, performance and how well the vehicle held up overall. If the buyer no longer owned the vehicle, they'd find out why their customer got rid of it.

After collecting several years' data, they'd know more about their vehicles' quality than any IQS would ever tell them. This information would be far more relevant to the consumer than knowing that car A averaged 0.043 fewer defects when new than car B. If a manufacturer came out on top of this kind of survey, they'd have something to brag about. And it would be interesting to see how their IQS ratings correlated to their "real world" results after a few years.

I have no idea why manufacturers haven't embarked on a project like this. The only reason I can think of: they don't want to take a beating from the reality stick. They'd rather go on blithely believing surveys that tell them their brand-new cars look, feel and act brand-new than watch their self-aggrandizement shrivel to nothing in the face of cold, hard data.

I know I'm tilting at windmills here. But it's high time the manufacturers stop hiding behind bogus quality ratings and start producing vehicles that are designed to be class leaders in every aspect. Then they wouldn't need contrived crutches like initial quality surveys. The product would sell itself and customers would be lining up for more.

Beware the Ides of March! OK, relax. The sales figures are in for Julius Caesar’s final month. While it's hard to find new ways to say "GM, Ford and Chrysler sales are sinking while Toyota's eating their lunch" month after month, it's not impossible. How about this: The Big 2.5 look more and more like Lawrence Edward Grace Oates (to Toyota’s Roald Amundsen). “I am just downsizing and may be gone for some time.” Anyway, the more things change, the more they change the same.

Compared to last March, GM sales sank four percent, Ford’s plunged nine percent and Chrysler Group’s tumbled 4.6 percent. Overall, domestic vehicle sales were down 3.7 percent— against the backdrop of ToMoCo's 11.7 percent sales gain. Despite Toyota's seemingly unstoppable ascension (managing Detroit's decline is still job one), there were a few reasons to be cheerful.

Pre-divestiture Chrysler watched The Dodge Boys move 32 percent more Calibers than last year, proving that their macho SUV-lite has legs. Less explicably, Charger sales galloped ahead by 40.8 percent. And thanks to the runaway success of their new four door, Jeep Wrangler sales scrabbled ahead by 63.8 percent.

The Ford Fusion continues to gain traction; sales are up 47.5 percent over last year. Capitalizing on the small car surge, Chevy sold 53.1 percent more gas-sipping Aveos in March ‘07 than in March ‘06. At the other end of the CAFE spectrum, Expedition sales rose 27.8 percent while Suburban sales were up a gargantuan 73.3 percent.

March on March, import sales were up 17.5 percent. Mazda came in with the lion’s share; the Ford sub’s sales rose by 47.9 percent. Mitsubishi showed a healthy 22.3 percent increase. Stalwarts Toyota and Honda clocked 15.6 and 13.6 percent increases, respectively. It would’ve been an even more dramatic import victory if not for Scion (down 23 percent), VW (down 15.3 percent) and BMW (MINI tumbled 5.1 percent).

For the most part, inventory levels declined across the board. Only two Fords exceeded the magical 90-day supply mark: the Mark LT (101 days) and Montego (95 days). Chrysler has recovered from the sales bank fiasco; only low volume models (Viper, Crossfire, Sprinter) are languishing on lots. That’s aside from the 117-day supply of Jeep Compasses, up 11 days from February.

While GM averages an 86-day vehicle supply, GMC has a 149-day supply of Canyons and a 125-day supply of Sierras. Chevy dealers hold 102 day’s worth of Silverados and 101 day’s worth of Colorados. Saturn lots are clogged with 214 days’ worth of IONs and Pontiac dealers are feeling the Vibes for 129 days. Meanwhile…

The average Toyota had a 46-day shelf life. Nissans disappeared in 67 days. Even last month’s lot queen, the Mazda B-series truck dropped from a 229 to a 183-day supply. Once again, the Honda Fit led the pack with just 13-day's supply ready for sale.

In sales per dealer (SPD), Toyota once again topped the chart, up 39 sales to 175 SPD. Surprisingly, Ford averaged more SPD than Chevy (57 vs. 52). At 38 SPD, Dodge led the way for Chrysler Group. In contrast, Mercury dealers moved seven units apiece. Once again, Buick set the floor, averaging only six sales per dealer.

Three manufacturers saw full-size pickup sales increase from February to March: Ford (up 16.2K), Dodge (up 9.6K) and Toyota (up 3.5K). After a healthy jump from January to February, total sales of GM’s newly- launched GMT900 pickups decreased by 4.7K units in March.

Considering increased Sierra and Silverado inventory levels, and a sales decrease against its competitors’ increases, this could be an early indication of serious problems to come. Unless GMT900 pickup truck sales pick up or GM cuts production, we’re looking at a significant summer clearance sale. Any price reduction would likely be met in kind, leading to the beginning of the end for full-size pickup truck margins (as previously predicted here).

At the same time, domestic manufacturers have been slow to offer suitable alternatives to their larger and more profitable trucks. It may be too late to regain lost ground. In March, domestic light truck sales sank 4.8 percent while more economical imported light trucks rose 18.3 percent. GM’s small pickups—the Canyon and Colorado– fell by 14.6 and eight percent respectively. Toyota’s Tacoma is up 16.5 percent.

Taken as a whole, March’s sales figures indicate that the domestics are still struggling to stem the transplants’ ceaseless onslaught. The trend toward downsizing also continues, although perhaps not as radically as some have predicted. 

Next month, TTAC’s launching some new methodology. I’m trending sales for selected vehicles from The Big 2.5 and Toyota in four different categories: Passenger Cars, Full-sized Trucks, Truck-based SUVs, and Car-based CUVs. I’ll post graphs showing the comparative results along with data from the same time last year. This should give us greater insight into sales trends across brands and models.

At last week's DaimlerChrysler stockholder meeting, a man named Ekkehard Wenger stepped up to the microphone and said his piece. "For nine years you have been sitting on this scrapheap called Chrysler. Nobody has learned anything. To call this a sale is a euphemism. If you pay for the garbage man to empty the dustbin, does that mean you have sold something to the garbage man?" While calling Chrysler a "scrapheap" is a bit harsh– the American automaker supported Mercedes for several years when the Germans were losing money– one wonders how Kirk Kerkorian feels about being called a garbage man.

Captain Kirk surprised quite a few people last week. The incipient nonagenarian beamed down the only private bid for Chrysler thus far: $4.5b, with $100m in cash up front in return for exclusive bidding rights. Kirk's play marks his second attempt to take over Chrysler; a sequel to his ‘95 "I'm with Lee" (Iacocca) tour. While that financial foray failed, Kirk became Chrysler's largest stockholder. He secured a place at the board room table for his beancounter extraordinaire Jerry York. 

In 1998, Daimler-Benz acquired Chrysler. Despite a financial bonanza, Kerkorian expressed his displeasure with the so-called "merger of equals" as billionaires are wont to do: he sued DaimlerChrysler for $2b. Kerkorian claimed Daimler-Benz had deceived investors, misrepresenting a corporate takeover as a partnership. He lost the lawsuit, appealed and lost again.  

Kerkorian expressed his displeasure as billionaires are wont to do: he tried to take over General Motors. After buying huge quantities of GM stock, Kirk secured a place at the board room table for his beancounter extraordinaire Jerry York. When GM rebuffed Kerkorian/York's plans for reform and rejected a suggestion to merge with Renault-Nissan, the Lion of Las Vegas cashed in his chips, sent Jerry home and called it a day. 

Spying Chrysler's upcoming dissolution, Kerkorian is hoping the third time's a charm.  In carefully worded letters from his pet Yorkie to CEO Dieter Zetsche and the DCX Supervisory board, Kerkorian outlined his USP (Unique Selling Point). If they'll deliver Chrysler unto Kirk he'll offer the UAW and Chrysler's senior management "the opportunity to participate… as equity partners in the transaction." 

In a statement released last Friday, Tracinda Corporation (Kerkorian's corporate front) described a Kerkorian-controlled Chrysler where "all the parties share equitably — with no one group (including ourselves) trying to gain an unfair advantage over the others." 

For their part, the Germans are understandably leery of Kirk's intentions. Lest we forget, just three short years ago, Mr. Kerkorian was dragging DCX to court to answer fraud charges, which cost DCX tens of millions of US dollars in legal fees. 

Given Kerkorian's "strip and flip" history with other acquisitions, the United Auto Workers (UAW) is suspicious that Kirk's ode to consensus masks the man's intention to slice the company to ribbons. UAW Local 7 president Dale Hunt asked, "What changed his mind from breaking it up to wanting to keep it together, and now all of a sudden he wants to get involved with the union?" 

Maybe it's got something to do with DCX' assertion that they won't sell to someone just because their bid was worth a few extra dollars. (As if.) The Germans have dictated that two other considerations must be addressed by bidders: preserving workers' benefits and ensuring Chrysler's long-term health. 

That's gonna be a bitch. Chrysler's new master will inherit almost $17b in healthcare liabilities. Kerkorian and Co. are trying to resolve the issue by asking the UAW for healthcare concessions in return for [a purported] 10 percent equity stake in the company, plus a seat on the board.  

Or not. UAW President Ron Gettelfinger vehemently denies participating in any discussions with Kirk's mob.  Last Friday, in an interview with Detroit radio host Paul W. Smith, Big Ron stated, "I've had no discussions with anybody from Tracinda, and I don't recall anyone in our organization talking to them. We've had no discussions in this regard." 

If Kerkorian wants to pull off this deal, he'll have to mend fences with Big Ron's constituency- and fast. Every Chrysler bid is likely to include provisions for UAW concessions. If Captain Kirk wants his money to rule the day, he needs more than a promise to give the UAW an equity stake. As always, a procession of armored cars stuffed with cold hard cash should do the trick. 

Additionally, Jerry York had better start putting in a lot of overtime kissing ass on the DCX board.  With a ten year history of animosity to overcome, Tracinda's main men may be about to learn the meaning of an old military expression: "Don't shit in your own mess kit." 

Neither DCX nor the UAW have shown any interest in Kerkorian's offer.  With competition including one of Chrysler's biggest suppliers (Magna) and a former Chrysler COO (Cerberus' latest hire, Wolfgang Bernhard) this looks like strike three.