When we added a comments section to The Truth About Cars, I was determined that TTAC would not become what Jalopnik’s Mike Spinelli called “a picnic over a cesspool.” To that end, TTAC instituted a zero tolerance policy towards comments that flame/insult the website, its authors or fellow commentators. I’ve sent dozens of emails to offenders, explaining why their comment(s) were edited or deleted. I’ve also permanently banned seventeen subscribers from posting. I believe this policy has been a success. But I want to give you a chance to publicly vent your feelings on our editorial policies without fear of retribution. And here it is.

Given our “death/suicide watch” coverage, it’s no surprise that some readers continue to believe TTAC is biased against The Big Two Point Five. Some feel so strongly they consider us anti-American. First, I would remind these critics that the site contains both positive reviews of domestic product (Fusion, Navigator, GT500, Corvette, SSR, Outlook, etc.) and negative reviews of transplant vehicles (Tribeca, M5, Cayenne Turbo S, etc.). Second, criticizing American companies is not un-American— especially when you’re trying to alert these organizations to the dangers they face. If you beg to differ, well, differ away.

Meanwhile, anyone who wants to forward a more positive perspective on Detroit’s fortunes is invited to submit one or more 800-word editorials justifying their optimism. We’d also welcome any writer willing to chronicle the triumphs and tragedies of foreign or transplanted automakers (Toyota, Honda, Nissan, Mercedes, BMW, etc.). In any case, rest assured that TTAC’s always open to editorials on any automotive subject, including opposing viewpoints. And, in our defense, our Detroit-centric coverage reflects limited resources rather than ambitions.

TTAC also stands accused of hypocrisy. Specifically, my editorial calling Bob Lutz an idiot had many wondering why I felt free to make such an undignified statement when they’re prohibited from making similar remarks about the site, its authors of other commentators. At the risk of making an invidious distinction, TTAC’s zero tolerance anti-flaming regs do NOT apply to the editorials themselves. Our essayists’ job: stimulate vigorous debate. If I/they must use hyperbole and deliberately provocative prose to achieve these goals, by God I/they will. If this double standard rankles, well, now’s the time to say so.

I’d also like to know if we’ve got our editorial mix right. Generally speaking, TTAC’s publishing a single piece per day, alternating between rants and reviews. I experimented for a bit, running my Jalopnik precasts in addition to the normal editorial posts. Would you like these audio features back again? What about QOTW (Question of the Week)? While we’re at it, should TTAC resurrect the “as read by” audio on the editorials and reviews? Do you want to see accompanying video, or are we best off sticking with writing?

Those are my concerns. But I don’t want to frame this debate. Let slip the dogs of war. Don’t hold back. Tell us what we’re doing wrong or, if you’re feeling charitable, what we’re doing right. No holds barred. No limits, save [a bit of] linguistic decency. And one more thing. Don’t think I get a thrill out of banning people from commenting here. As you might have guessed, I may not share these miscreants' opinions, but I share their passion, frustration and anger. Clearly, they don’t understand or appreciate the boundaries of civilized discourse. But it's equally obvious that they have strong beliefs. For that, and nothing else, I admire them. 

Picture this: you’re a middle-aged, mid-level, middle-management guy in the mid-west. You’ve gone a bit doughy around the middle. You’ve got 2.5 kids and a golden retriever. You got socks for Christmas. It’s been a long time since you handed in your acid-wash denims for wrinkle-resistant Dockers, swapped the Van Halen for Vivaldi, and traded in the Firechicken for a four-door bore. But there’s something strange about today. The (predictably) silver sedan you’re sliding into isn’t all that boring. She’s got dual exhausts, a V6 packed with ponies and check out those taillights… Sweet! You hit the push-button-starter (!) and there’s an underhood growl, just as Wilson Phillips breaks into, “Hold On For One More Day.” Yep, it’s the 2007 Nissan Altima.

Writing in his Fastlane Blog, GM Car Czar Bob Lutz recently claimed that proposals to raise Corporate Average Fuel Economy (CAFE) standards by four percent per year would “effectively hand the truck and SUV market over to the imports, particularly the Japanese, who have earned years of accumulated credits from their fleets of formerly very small cars." Wrong. First, CAFE credits were never transferable between cars and light trucks. Second, as of ’07, light truck CAFE standards are gone; replaced by target mileage figures based on a vehicle’s footprint. Third, even when there WERE such things as CAFE credits for light trucks, Toyota, Honda and Nissan never used them. Fourth, Bob Lutz is an idiot.

Some time ago, we pointed out that an auto industry executive who can’t name Volkswagen’s brands wasn’t an ideal choice for Vice Chairman of Global Product Development. We’ve also chronicled the numerous occasions when Maximum Bob’s betrayed his firmly held belief that firmly held beliefs trump reality, even when they don’t. And now he’s taking on both environmentalists and the federal government without having a clue what he’s talking about.

It’s hard to believe that this uninformed loose cannon was hired to be GM’s “car guy”: the man charged with lifting GM’s products from their fug of mediocrity into a brave new world of stunning design, peerless powertrains and world class interiors. Feel free to debate Lutz’ handiwork thus far, but I reckon the majority of The General’s new products continue down the path marked not-quite, me-too, also-ran, we’re getting there, you just wait and WTF. The fact that GM’s Car Czar is still around to say stupid things on his blog (and in the media) says bad things about CEO Rick Wagoner’s management skills.

If you’re wondering why Wagoner lets Lutz get away with spouting politically incorrect nonsense, it’s because what Lutz says, others think. Face it: GM’s Board of Bystanders doesn’t pay an employee over $6m per year and give him his very own blog if his opinions fly in the face of his equally well-compensated peers. So when Bob gripes that more stringent CAFE standards would put domestic manufacturers “at odds with the desires of most of our customers, namely larger vehicles,” you can bet that the “bigger is better” mantra is alive and well at RenCen.

Yes, despite resurgent environmentalism and the effects of the Iraq war on the American motorist’s psyche (i.e. increasing their concern about fuel consumption), Maximum Bob’s mob continues to believe that U.S. consumers want the biggest damn vehicle they can afford, period. In Bob’s world, it’s all about size: “I’m the guy on record who compared forcing automakers to sell smaller cars to improve fuel economy with fighting the nation’s obesity problem by forcing clothing manufacturers to sell garments in only small sizes.”

Bob believes that CAFE regulations are a government plot to thwart the will of the American people and shoehorn them into uncomfortable cars. Bob’s subsequent proposition– higher gas prices are a fairer and more compelling way to get Americans to drive “very small cars”– is not without merit. Of course, MB quickly assures his readers that he’s not advocating higher gas prices. No, bio-fuels are the “real way to save fuel”– until GM can realize the “electrification” of its vehicles (which, presumably, the government won’t encourage force anyone to buy).

According to Maximum Bob, as long as gas costs around $2 a gallon, “people will exercise their freedom to buy the vehicle they want, V8 engine and all.” In other words, Americans are selfish bastards who will buy gas-guzzling land yachts– unless they can’t afford to. Even if you agree with this sentiment and reject my depiction of MB as a clueless blowhard whose ideas date back to the days when Detroit dismissed small (yes small) imported cars as “Jap crap,” you have to admit that he’s making all the wrong noises. 

The question is, who’s listening? The comments immediately following Bob’s post indicate he’s preaching to the choir. Our own ThriftyTechie spoke for many: “Couldn’t have said it better myself.” But after Bob’s message hit the mainstream media, the comments grow more… impatient. “Quit whining,” Chris R chides. “GM should be faster to market with products that people want to buy.” As GM’s PR bouncers pre-approve all published comments, one wonders how many more vitriolic reactions were swept under the e-rug. Plenty, I’d guess.

But again, the more important audience for Bob’s “Season’s rantings” lies within GM. If GM’s Car Czar can slam CAFE standards with irrational, bellicose, self-righteous and petulant impunity, in public, what effect does his anti-efficiency argument have on the thousands of designers, engineers, pencil pushers and bean counters further down the GM food chain? With Maximum Bob Lutz calling the shots for GM's product portfolio, The General doesn't have a hope in Hell of pulling itself out of its current tailspin. Blog that Bob.

[Click here  for "Season's Rantings" on GM's Fastlane blog.] 

Hunkered down inside the Nissan 350Z Roadster convertible with the top up, you know the way a clam must feel when it looks outside its shell. The top is screwed down like one of those heavy-duty chop jobs on a lead sled of yore. While claustrophobics need not apply, the Z’s powerplant’s guttural moan vibrates through the floorboards and around the metal carcoon in a most sensually satisfying manner. Open the lid and this is what a proper sports car is all about: pure, unadulterated exhilaration.

TTAC recently placed Chrysler on suicide watch for the easily correctable fact that vast empty spaces and dealers’ lots are stuffed with Chrysler/Dodge cars, trucks. minivans and SUV's that no one wants to buy. The new Sebring is a far deadlier proposition: a car headed straight for rental car Hell. For a few bills less than our semi-loaded (half cocked?) Sebring tester, you can buy a base Chrysler 300, which, according to Mr. Mehta, has “reinvigorated American car design.” The new Sebring is less invigorating than Vicodin. In fact, I reckon the model only exists because car rental customers are still willin' to take what they get.

In the late 70s, Dutch traffic planner Hans Monderman experienced the kind of insight that gets people sent to an asylum. ”Let’s eliminate all traffic signals and signs and remove the divisions between the road and sidewalk where cars and people interact. There will be fewer accidents and traffic flow will improve.” Monderman’s approach seemed completely radical: roads that seem dangerous are safer than roads that seem safe. The concept was a smack in the face of convention.

Accepted traffic planning methods date back to 1929, to Radburn, New Jersey. The residential area was launched as ”The Motor Town of the Future.” It was, in effect, a study in near total human/traffic non-interaction. The reasoning was obvious: cars are big, fast and hard; people are slow, soft and fragile. Segregate the two and people can walk safely and cars can move quickly from A to B. The result became a model for road planners in all developed nations and a blueprint for the world.

The system had an unintended consequence: endless stop-and-go. Where drivers and pedestrians [eventually and inevitably] interact, they both face countless interruptions to their natural flow. They have to stop. Monderman’s counter theory: go slower to move faster. To help road users go with the flow, Monderman recommended bringing cars and people into greater proximity– without signs or signals. Monderman argued that human contact through the windshield creates a self-regulating and efficient traffic flow, as users negotiate with one another for right of way.

Monderman’s ideas were met with near biblical outrage. The Dutchman persisted, until the Netherlands gave him permission to test his theories. In several Dutch towns, engineers ripped out signs and signals, flattened sidewalks and created radical new road-flow patterns. The result: a statistically verified reduction in accidents and fatalities. Monderman’s success with ”human contact flow” has lead to changes in roadways throughout the European Union and the U.S.

An American named Walter Kulash added to the growing ”liveable traffic” (r)evolution. The Senior Traffic Engineer at the Orlando community-planning firm of Glatting Jackson Kercher Anglin Lopez Rinehart Inc. saw that outdated planning had created islands of inactivity in both suburbia and urbia. At night, downtown areas are abandoned. During the day, outlying residential districts are desolate. People spend a lot of time driving from one to the other, usually negotiating traffic snarls.

Kulash believes in creating more efficient habitats, by manipulating street geometry and introducing mixed use of space. Working with planners intent on transforming West Palm Beach from a dead end darkworld to a 24-hour address, Kulash helped create a liveable town out of what used to be shops and parking spaces. Developers have seen property values increase three and four-fold after Kulash’ interventions. His traffic-calming and urban design methods are helping create numerous ”liveable traffic spaces” across North America, where people work, live, shop, play AND drive.

Monderman’s flow generation and Kulash’ traffic calming principles could trigger a shift in automotive tastes. Transportation analysts estimate that the average U.S. vehicle travels roughly 30 miles a day. Encouraged by the ”New Urbanism” planning scene, drivers may finally abandon the idea that their cars must be capable of transcontinental transportation, and shift to lower speed plug-in hybrids and electric vehicles. Rising gas prices and increasing environmental/political consciousness will only accelerate the transition.

A year ago, I asked Walter Kulash’s opinion about a car platform bound for the U.S. Kulash said that the new car fit within his critical ”effective turn-radii” requirement; it would be able to get around the new townscape with ease. In other words, Kulash is creating roads where big cars are as out of place as a sumo wrestler in a ballet troupe.

To conform to American tastes, these vehicles would have to be small on the outside, yet feel big on the inside. The Nissan Versa understands the equation. But the genre needs a premium player to overcome the stigma of ”small = cheap.” In that regard, the long-delayed SMART car is the one to watch. Originally planned as an EV city runner, the Smart cars now sip gasoline. Don’t be surprised to see the platform get new drivetrains as DCX reaches for profit opportunity.

The rise of car sharing companies like Flexcar and Zipcar also show that a growing percentage of drivers are willing to abandon the gratification of ownership for the ease and economy of more practical personal transportation. Where these companies are going, the majors should follow. American carmakers would be wise to adjust their future products to match this merging of urban and suburban environments.

The Big Two Point Five should build products that exploit the new, more people-friendly asphalt paths through our streetscapes. By catering to the switch from gas-guzzling land yachts to economical, environmentally-friendly runabouts, Detroit may discover the economic reinvention it so dearly needs.   

Surrounded by four competing sedans, the Nissan Sentra looks like a hippopotamus amongst a pack of grinning velociraptors. It’s as if the old model went on a Haagen-Daz bender after having its heart broken by a Renault Megane LE (Lothario Edition). And talk about late to the party. If you’re young, stylish and sporty-ish, you buy a Mazda3. If you’re young, stylish, play too much X-Box and want a handbrake like a photon torpedo release, you buy a Honda Civic. And if you’re a veteran of the Crimean War or your personality’s been surgically removed, you buy a Toyota Corolla. So what does the Sentra bring to the small car party?

A genius named Vinnie Cilurzo in Santa Rosa, California makes a beer called “Pliny the Elder.” I will never forget the first time it passed through my lips; it was as if the Victoria’s Secret angels were lap-dancing on my tongue. Even after thirteen years of home brewing, even after qualifying as a Certified beer judge, nothing had prepared me for my first taste of Vinnie’s magnificent brew. And no beer I would drink after that would ever taste the same. I’d had a beer epiphany. As a pistonhead, my first automotive epiphany occurred, oddly enough, in a Jeep Cherokee.

I was in the market for a new car. I needed an inexpensive vehicle capable of hauling a recently purchased upright bass. Out went my safe, reliable, comfortable and endlessly dull Nissan Sentra. In came one of the most remarkable vehicles ever produced. Now you might think my moment of revelation occurred on a broken trail or eighteen-inches of mud. And I’m proud to report that this particular Cherokee– and the one I purchased afterwards– saw plenty of off-road action. But the big moment arrived on plain old asphalt.

I was heading back from my parent’s home in Los Angeles (where my bass had been stored) to my home in San Francisco. I was driving the Cherokee down California’s numbingly straight main vehicular artery, Interstate 5. It was a weekday morning; there were neither cars nor constables visible in any direction. The Jeep was humming along happily at 85mph. And then, for reasons lost in the mists of time, I buried the throttle. The Cherokee’s 4.0-liter straight-six came alive and the needle climbed higher and then higher still.

Now I’ve passengered at more than 200 miles an hour in a NASCAR race car. I can say with some authority that the Jeep’s 120mph terminal velocity was not an objectively impressive feat. But it was the first time in my life I’d ever driven fast. To say I was hooked is a monumental understatement, and I have the insurance premiums to prove it. Of course, going fast in a single line may be the be-all end-all for muscle car or drag racing aficionados, left / right action is where it’s at. As I discovered during my second epiphany, on a test drive of an Audi A4 1.8 Turbo.

After the dotcom bubble burst, I returned to my native Los Angeles. After two car-free years in Manhattan I wanted a set of wheels so bad I could almost pay for them. The cheapest Audi’s AWD turboness appealed to me– though I really had no notion why. With the dealer in situ, I gave it a go. I will never forget taking the vehicle’s speed into and through a corner. The g-force joy unleashed by Ingolstadt’s engineers was indescribably delicious, like joining the mile high club, only down to earth.  I was hooked X 2.

About a year later, I dated an exotically beautiful woman (it is hard to argue against Scottish/Vietnamese hybrids) who owned a BMW 540i. On our very first date, I asked if I could drive the mid-sized, V8-powered German luxury car. Let it never be said that I have my priorities straight; the Bimmer’s throttle response, seamless gearbox, faultless chassis control and sublime ride quality suddenly became much more appealing to me than the stunning sexpot seated to my right. Cars like this existed? I believe my political affiliation changed from Nadar-socialist to confirmed-capitalist in 1320 feet.

One of the things I love most about my job is my job. Case in point: on a junket to Skip Barber’s High Performance Driving School I managed to overheat a BMW M3 and shred the tire off a Porsche 911. My third automotive epiphany arrived on the second day of the class in the form of a red Dodge Viper. That’s 8.3 liters, 505hp and 550lbs. feet of torque and a cabin temperature north 150 degrees. It was terrifying. Everything I did was wrong, wrong, stupid, dangerous and wrong. Cones ran for their lives, wheels smoked and more often than not, the big bad Dodge found itself going backwards. I was hopeless.

But then, suddenly, for about one-quarter of one of my twelve laps, I did everything right. Hard on the throttle. Pick the perfect line. Light braking to redistribute the weight. Late steering input to the apex. Nail the gas and blast out of the turn. Sadly, I performed a scary, pupil-dilating 720 afterwards to, uh, celebrate. And yet, for the most fleeting of moments, I was Fangio: calm, deliberate and in control.

Now, whenever I test a car, no matter how humble or exotic, I wonder if a paradigm shift awaits. Mind you, I don’t need another epiphany. I just want one.

The Chinese automotive market has over a billion potential customers. Sales growth is well into the double digits. Labor rates are a fraction of those paid in western countries, without any union rules to slow down investment or add legacy costs. An ideal place for American investment? Depends on how you look at it. The Chinese market is controlled by a totalitarian government and regulated by an Automobile Industry Policy that’s more convoluted than a bowl of shahe fen noodles. As China nips at Germany’s heels to become the world’s third-largest auto producing country, let’s take a closer look at the sleeping dragon.

There are nearly 100 automobile manufacturers in China.  Ninety-percent of the market belongs to eight state-owned companies. To meet soaring demand for new cars, these companies have partnered with automakers from around the world. These partnerships can appear strange; one Chinese company may have several partners which are competitors in the rest of the world. Here’s the list:

FAW:  Toyota/VW/Mazda
SAIC:   GM/VW
Changan:  Ford/Suzuki
Dongfeng:  PSA Peugot Citroën/Honda/Nissan-Renault/Kia
Guangzhou AIC:  Toyota/Honda
Beijing AIC:  DCX/Hyundai
Nanjing AIC:  Fiat
Brilliance:  BMW

While Chinese law prohibits any foreign company (or combination of companies) from owning more than 50% of their Chinese partner, these joint ventures have proven lucrative for all the parties involved. The Chinese companies get access to the engineering and design expertise of world-class companies, while the partners gain a quick inroad to what is arguably the hottest new car market in the world. 

As the market has grown, a number of independent (i.e. carmakers who aren’t affiliated with a foreign manufacturer) local companies have sprung up. They are usually either motorcycle manufacturers expanding into the auto market, new companies funded by capital from other industries (such as consumer electronics) or parts manufacturers that started assembling their parts into complete cars. The primary independent players are:

Southeast
Chery  
Geely
GreatWall
Zhongxin
Jianghuai
Hafei

Of these, government–owned Chery is the best known– thanks to Malcolm Bricklin’s professed intention to import cars built by Chery under his Visionary Vehicles nameplate. While Bricklin keeps pushing back the introduction of his Chinese-built products due to quality, production and safety issues (not to mention a lack of investors), he insists he will revolutionize the American market with his line of low-cost, high value vehicles. Recently, DCX has also been negotiating with Chery to produce a subcompact economy car for Chrysler.

Chery’s other claim to fame isn’t so, well, cheery. They jump-started their production capability by buying the defunct VW factory in Westmoreland, PA and relocating it to China lock, stock, and tool dies. They then procured blueprints from SEAT for a car based on the Jetta and began producing a clone. (Jetta is the biggest selling car in China and the Chinese market generates almost 20% of VW’s pre-tax profits). As you can imagine, VW was furious. They eventually accepted a financial settlement in compensation. 

To expand their operation further, Chery began hiring engineers from other companies including Daewoo. Two new models, the “Son of the Orient” and the “QQ” were suspiciously similar to Daewoo’s Magnus and Matiz (sold as the Chevrolet Spark). Chery introduced the QQ six months prior to the planned introduction of the Spark, priced $1500 lower than its automotive homonym. 

GM accused Chery of “copying and unauthorized use of GM-Daewoo’s trade secrets.” Chery countered by claiming they had developed the QQ independently and with only “inspiration” from the Matiz. Since this “inspiration” consisted of styling so similar you couldn’t tell them apart from more than 10 feet away and interchangeable body panels, doors and other parts, GM filed suit.

After three years of litigation, GM and Chery finally settled out of court. While the details of the settlement haven’t been released, GM did win one concession: Chery can’t sell cars in the US under its own name due to the similarity between “Chery” and “Chevy.”

The problems with Chery underscore the sword of Damocles hanging over foreign manufacturers operating in the Chinese market. Any time you’re dealing with companies owned by a dictatorial government, you’re at the mercy of the whims of the political leadership. The Chinese government (controlled by the army) provides all of the information used for business planning: economic growth, per capita income, projected sales, etc. They create the rules for the protection of intellectual property. They control the courts that interpret the rules on the protection of intellectual property. They control everything within the supply chain, from labor to raw materials to retail distribution to taxes to traffic laws. 

Like China’s so-called citizens, foreign auto companies are completely at the Chinese government’s mercy. If China’s rulers decide to nationalize all automotive production facilities, there’s nothing foreign automakers can do but leave. Meanwhile, they’re making hay while the sun shines, doing whatever they can to make sure their “partners” don’t pull the plug.

Voting for The Truth About Cars’ Ten Worst Automobiles Today (TWAT) awards has now closed. We will reveal the ten winners/losers next week, once our writers have penned their pithy pillories and our new PR flack has been prepared. Meanwhile, our esteemed (though not necessarily by us) colleagues have begun their annual love-ins. Motor Trend has named the Mercedes GL450 their SUV of the Year– testing the controversial theory that the most expensive vehicle is also the best. Edmunds has unveiled their “most wanted” list, with no fewer than 32 winners (TTAC snipers note: only two domestic gongs). Thankfully, the awards season isn’t all ad-scented fluff. For example, here’s the National Insurance Crime Bureau’s (NICB) 2005 list of America’s most stolen vehicles:

1.  1991 Honda Accord
2.  1995 Honda Civic
3.  1989 Toyota Camry
4.  1994 Dodge Caravan
5.  1994 Nissan Sentra
6.  1997 Ford F150 Series
7.  1990 Acura Integra
8.  1986 Toyota Pickup
9.  1993 Saturn SL
10. 2004 Dodge Ram Pickup

The NICB's list was compiled using FBI data on 1,235,226 stolen vehicles. Last year, the Bureau’s number crunchers estimated the average value of a heisted car was $6,173. (I guess you gotta steal a whole lot of Saturn SL’s to make up for a stolen Ferrari.) The bottom line: over $7.6b in insurance claims your insurance company would rather not pay, thank you very much, and God knows how much in “extra” premiums you’ve got to fork over whether you like it or not (at least that’s Allstate’s stand).

The survey raises some important extra-financial questions. Who would steal a 1994 Dodge Caravan? An eight member team of bank robbers? Why is General Motors, once again, so poorly represented on a list, any list? In fact, the vehicles on the NICB’s most stolen vehicles list aren't all that surprising. The majority of car thefts are crimes of opportunity. These are the alarmless cars most likely to be parked at the mall or along the street or, in the case of the Saturn, stolen because the owner paid someone to do it. 

These most stolen stats are extremely misleading for paranoid car shoppers. After all, there are a LOT of Accords, Civic and Camrys on American roads. If theft-aversive consumers seek the least lifted automobiles, they need to know which cars are most likely to be stolen as a percentage of the total number of those models still in service. For that reallycooldatainfo, we turn to R.L. Polk & Co., home of intelligenceinsightimpact™.

1. 2001 BMW M Roadster
2. 1998 Acura Integra
3. 2004 Mercury Marauder
4. 1999 Acura Integra
5. 1995 Acura Integra
6. 2002 Audi S4
7. 1996 Acura Integra
8. 1997 Acura Integra
9. 2001 Acura Integra
10. 2000 Jaguar XJR

M Roadster? Audi S4? Jaguar XJR? I guess when a fast car gets stolen, it stays stolen. And man, are those thieves clever! Stealing a car that looks like a cop car (Mercury Marauder) is nothing less than criminal genius (at least in Rhode Island). Actually, it’s not quite that simple/interesting. This is a list of the top ten stolen vehicles, as a percentage of the total number of those models sold, that aren’t recovered.

The feds report that 62.1% of all stolen vehicles– some 450k automobiles– are never seen again by their owners. Well, not by Americans. As much trouble as the United States has keeping illegal immigrants out, we have difficulty keeping stolen cars in. Exporting hot wheels (1:1 scale) is una cosa muy grande. In ’05, the NICB’s multi-lingual sleuths claim to have repatriated some 3k vehicles from Belize, Costa Rica, El Salvador, Dominican Republic, Guatemala, Honduras, Jamaica, Mexico, Nicaragua, Venezuela and (get this) Lithuania. Obviously, that’s a drop in the container cargo vessel stuffed with stolen cars filled ocean.

The insurance industry mouthpiece says a much larger number of stolen vehicles are “give ups;” the PC term for cars dumped illegally by cheats and deadbeats. The rest end-up in chop shops, helping to reduce the rapacious prices charged by original equipment manufacturers and increasing the profits of auto body shops at the expense of the insurance companies who pass that cost along to you, the guy who pays insurance and [probably] doesn’t know that his damaged vehicle has been fitted with stolen car parts so the autobody shop owner can afford a nice summer house by the lake, and a new bass boat.

The NICB has a solution to all this, similar to the one used by Antarctic explorers: layering. That’s a fancy way of saying don’t leave your keys in the car and buy as much protection as you can: alarms, immobilizers, tracking devices and some guy named Bruno. Strange that the NICB go to all the trouble of naming names and then forget to say it might be a good idea to avoid buying one of these thief magnets. Never mind. The truth is that car theft is a huge and hugely profitable business that endangers our lives (with crap parts). All you can do is all you can do. If “they” want your 1999 Acura Integra, they’re gonna get it.

The media’s failure to get ahead of The Big Two Point Five’s swan dive from grace is a source of constant amusement. The press’ collective reluctance to investigate the truth behind the automakers’ plight delivers endless wonder. But Motown media’s “eternal sunshine of the big ass automaker” shtick just plain rankles. In “Detroit Can Ride Out These Strange Days,” Free Press columnist Tom Walsh told his readers to hold fast and be of good cheer. ”These are nutty and painful times for Detroit's auto industry. But they are times for resolve, not for panic.” Hey Tom; are you sure about that?

Tom’s sure, and here’s why: “The most formidable challenge, the one so many in the global auto industry are obsessing about, is Toyota. Indeed, the Toyota monster is the underlying reason for GM's stock price drop after Wednesday's good-news earning report.” And there I was thinking that GM’s stock price drop was the “dump” part of Merrill analyst John Murphy’s “pump and dump” strategy. Or perhaps that GM’s sinking stock price had something to do with GM’s cash burn, employee-related liabilities, bloated dealer network and/or less-than-thrilling product portfolio. Nah; it’s all about ToMoCo.

At least Mr. Walsh is realistic about GM’s future prospects, in a denial-oriented, pay no attention to that man behind the curtain kinda of way. “GM is by no means in safe harbor… But whatever the short-term hiccups, Wagoner and Henderson and the rest of GM's management team are taking a disciplined approach to their issues. Costs are way down, revenue-per-vehicle-sold is up, and they handled the Renault-Nissan alliance issue smartly.”

Short term hiccups? You mean, like sinking market share and billions wiped from the corporate ledger? A disciplined approach meaning… the guys aren’t heading off for the links every Wednesday? Or an endless cycle of “no we won’t yes we will no we won’t” on discounts and spiffs? Sure, revenue-per-vehicle is up, but the company is still losing money. And if Walsh thinks GM handled the Nissan merger “smartly,” let’s hope he means quickly instead of intelligently. The really intelligent thing to do: an independent review of the deal (i.e. not putting the man in charge in charge).

Anyway, despite Tom’s stricture to chill, the facts about GM’s predicament are pretty nerve-racking. In the third financial quarter, GM’s cash position declined by $2.5b. (Short-term liquidity now stands at $20.4b.) Cash flow from its automotive operations– including restructuring costs– was a negative $5.1b. During the quarter, GM turned $2b of short term VEBA funds into cash and scored a $500m dividend from its GMAC financing arm. At the same time, GM forked-over $2.5b to GMAC to cover the “buy down” of its Zero Percent sale; a figure that includes additional loan loss reserves to cover deadbeats. Uh-oh.

As we warned, the Anyone With A Pulse sale boosted GM’s sales and reduced inventory– and hit GM’s cash flow like a Silverado driving into a wall. Sure, GM will receive another cash flow boost when its new pickup trucks arrive at dealers over the next several months, just as it did when the GMT900 SUVs rolled onto dealer lots. But The General’s bottom line remains the same: GM can’t generate cash from its automotive operations. That’s got to be stressful. 

Oh, GM also tapped into its secured credit line this summer-– supposedly to “test the mechanics of the line.” In fact, GM needed the additional liquidity to cover payables during plant shutdowns. The amount of the drawdown is [strangely enough] unknown. The borrowed funds were repaid during the quarter. But it was still a completely unprecedented maneuver. Feeling nervous yet?

CEO Rick Wagoner’s claim that GM’s cost cutting will save $9b annually will actually save the company about $5b in cash. Meanwhile, GM says it needs $400m to cover the deal over at bankrupt parts supplier Delphi in the fourth quarter of ’06, and will then pay Delphi around $100m per year for an “undefined period.” GM is also set to make a $1b contribution to the DC-VEBA in 2007, as per the health care “concessions” made by the UAW earlier this year. Without the proceeds of the GMAC sale… fuhgeddaboutit. Ready to freak?

Actually, panic is a highly evolved behavior. When an animal is trapped and fighting for its life, when it’s tried the logical escape route (fleeing) or last-ditch strategy (fighting), all that’s left are illogical and random actions (a.k.a. panic). By the same token, when a carmaker is trapped (heading for oblivion), when it’s tried the logical escape route (downsizing) or last ditch strategy (“bold” new products), all that’s left are illogical and random actions (filing for bankruptcy, merger, leaving the biz Studebaker-style, triggering a union strike, etc.). Of course, you can’t predict chaos (or its aftermath). But you’d think one of Detroit’s auto hacks would at least, you know, try.

Yesterday, a Yahoo news bulletin popped up: “GM’s losses narrow.” If that’s the way you see it, please don’t tarry here. You know GM CEO Rabid Rick Wagoner’s turnaround plan is “gaining traction.” You know GM’s too big to fail, that the supertanker will change course and avoid the jagged rocks of bankruptcy. The fact that GM’s fundamentals are still broken— too many brands, models and dealers; excessive bureaucracy and crushing union obligations— is not your concern. For those of you willing to stare into the abyss, let’s take a closer look at those third quarter results.

First, GM’s cash flow is still negative. GM NA dropped $367m for the quarter. That might not seem like much compared to last year’s $1.67b hit, but it’s not chicken feed— especially considering its origins. As the official press release joyfully proclaims “This significant progress largely reflects improvements in structural costs, as the company executes the pension, health care and manufacturing cost reduction initiatives related to its North American turnaround plan.” In other words, GM has reduced its costs and it’s still taking in less money than it spends. Even worse, there ain’t much more GM can cut.

No wonder Rabid Rick Wagoner was talking up the chances of the new Chevrolet Silverado/GMC Sierra pickups and the Saturn Outlook/GMC Acadia crossovers. While these vehicles offer the prospect of higher profits, their market segments are heating up, driving margins down. And they only represent a fraction of GM’s lineup across its eight US brands. The fact that GM’s margins are being squeezed across the board is a far more important financial factor than the Silverado/Outlook’s potential success. With over a million unsold units on the ground, the pressure to slash prices will grow, reducing margins yet further, and continuing GM’s reputation as the K-Mart of cars.

And there's your fundamental problem: GM is not a price leader. It’s still a high cost producer selling products at a discount. Public demand for its retail products just isn’t strong enough for it to charge prices equal to Honda/Toyota/Nissan. Bottom line: GM makes little to no margin overall on its North American auto business. Not to put too fine a point on it, it’s unclear whether GM can ever make a profit in North America again.

As always, market share is key, and the signs are on the disastrous side of bad. Despite public pledges to reduce bulk sales, nearly 25% of GM's sales still go to fleets. Pull those sales out of the equation and GM's market share at the retail level is only about 19%, spread over eight brands. Take out employee/vendor pricing deals, and the true retail demand for GM products is less than Toyota’s.

Now consider this: GM's third-quarter North American market share slipped a percentage point compared to a year earlier. In light of Ford and DCX' falling market shares, GM’s highly-trumpeted “market share stabilization” actually means it’s losing ground to the so-called imports. That ain’t good. Conquesting sales from Ford and Chrysler is hard enough. Taking on the non-union guys over at Honda, Nissan and Toyota will be just about as hard as it sounds— if not harder.

GM’s balance sheet may not show this sort of mission critical information, but there’s plenty else to set off warning bells (for those who aren’t deaf to the dangers). What are we to make of the fact that GM drew on its secured line of credit in Q3, and then repaid the money? We’ve been saying for quite some time that GM’s wandering on the edges of a liquidity crisis. The sale of half of the GMAC finance unit grows more important by the day— especially considering the rapidly deteriorating asset quality of their mortgage/auto receivables. Are the loan loss reserves adequate? If not, bad things are bound to happen.

There are other "hidden" shoals, such as the psychological impact of federal changes in the rules regarding corporate accounting for pensions and other post-employment benefits. When they kick-in in ‘07, GM will have no stockholder equity. None. While the development won’t have any cash impact, the the development will bring to light the magnitude of the liabilities facing Generous Motors. It’s a huge negative, despite being downplayed by GM’s management. And if that isn't enough to convince GM execs to break out the Prozac, UAW negotiations are set to begin…

In short, GM’s future is far from secure. Wagoner’s highly touted “turnaround” is based on the idea that GM can return to profit without changing its business basics (downsizing does not equal change). It won’t because it can’t. It no longer has the time or the money to do so. But more than that, its management doesn’t have the will. The man who does— investor Kirk Kerkorian— knows that he’d have to destroy GM to save it. If he lives long enough, one way or another, it will come to pass. 

If I worked for Infiniti, I’d spend a lot of my day pissed off. Infiniti G35 equals The Japanese BMW? Man that must rankle. Not as much as G35 equals The Poor Man’s BMW, but more than enough to aggravate auto execs all the way from Yokohama to Boulogne-Billancourt. In fact, I bet there’s a bunch of Infiniti engineers who’ve compared their handiwork to Munich’s motorized meisterstuck and can’t decide whether to commit seppuku or hunt down Bimmer’s boffins and make them eat sushi, if you know what I mean. OK, that’s a bit overly-dramatic, but what the Hell’s a Japanese sports sedan got to do to get a little respect around here?

According to Automotive News, jurors for the 2007 North American Car of the Year and North American Truck of the Year awards are currently considering some 26 vehicles. Yeah, well, 130 vehicles are competing for the 2006 TTAC Ten Worst Automobiles Today (TWAT) awards. And that includes badge-engineered clones which were nominated jointly. And you/we ain’t done yet. You’ve got ‘til 5:00pm EST to add your nomination to the list. Meanwhile, guess what? There's overlap!

Yup, there’s overlap between our list of TWAT nominees and the list of nominees for the North American Car/Truck of the Year (NACATOY) awards. In fact, over half of their nominees are also yours. Here’s the list of their candidates; the names in boldface are also nominees for a TWAT.

Acura MDX
Acura RDX
Audi Q7
BMW X5
Chevrolet Silverado
Chevrolet Tahoe/Suburban
Chrysler Sebring
Dodge Caliber
Dodge Nitro
Ford Edge
GMC Acadia
Honda CR-V
Honda Fit
Hyundai Santa Fe
Infiniti G35
Jaguar XK/XKR
Jeep Wrangler
Lexus LS 460
Mazda CX-7
Mercedes S class
Nissan Altima
Nissan Versa
Saturn Aura
Saturn Vue Green Line
Toyota Camry
Toyota FJ Cruiser

Finding so much commonality between two seemingly dissimilar groups of vehicles is somewhat surprising (and more than slightly amusing), but at least their list doesn’t include the number one TWAT nominee: the Jeep Compass. I reckon even co-opted journalists experience a blinding flash of reality from time to time.

So what criteria did NACATOY use to select their nominees? Hell if I know. I have no idea what voting process they’ll use to make their final choices either. (Perhaps one of their members would care to enlighten us below.)

We know that NACATOY nominees were selected by a hand-picked panel of automotive “experts” who are wined and dined regularly by the manufacturers, go on all-expenses-paid junkets and get box fresh, manufacturer-supplied examples of all of the cars delivered straight to their door, gassed-up and ready to go.

We also know that TWAT nominees were chosen by a group of passionate and very vocal pistonheads who spend their own hard-earned money for their transportation, know what they like (or dislike) and don’t have to worry about pissing off car makers, advertising agencies or media outlet beancounters. And, um, probably haven’t driven, nor will ever drive (mostly out of choice), a fifth of the nominated vehicles.

TTAC’s list of 10 most nominated TWATs seems to have reached an equilibrium point. Keeping up with the number of nominations and the vehicles nominated has been a challenge and privilege (in a perverse sort of way). However, it’ll soon be time to put those numbers away and begin the second round of the process.

In a week or so, the TTAC selection committee will convene to carefully consider the merits, or lack thereof, of each candidate. We’ll narrow the list to 20 finalists using our keen insight and every analytical tool available to us. Or maybe we’ll just put all of their names in a fishbowl and draw 20. Whatever method we use, we guarantee you’ll have 20 really good (bad) winners (losers) to select best (worst) of.  Then let the chips fall where they may!

Since this article was written, we've begun voting on the '06 TWAT awards.

Please click HERE to cast your vote on the final 10. You will be returned to the TTAC home page.

Star Trek based many of its best episodes on simple homilies. In “The Lights of Zetar” (Star date 5725.3), Memory Alpha is attacked. Creatures from the planet Zetar concoct an energy storm that ravages the planetoid. The Federation’s main computer database, containing all of the cultural and scientific data they’ve ever gathered, goes fubar, and with it, the Federation. What did they expect? To put a little Yoda spin on it, into one basket all eggs should not go. OK, now, Earth date October 16, 2006. Dearborn rolls out the Ford Edge. See what I mean?

It’s been a month since Ford's “Black and Blue Friday.” The product(s) driving the new new Way Fordward are rolling off assembly lines. The Ford Edge and Lincoln [Mary] EmKayEx carry FoMoCo's financial future in their five passenger hulls. Mark Fields is on record as stating that these are the Blue Oval’s halo cars, not the rarified Shelby Mustang variants. Halotosis or not, industry analysts and market mavens will keep keen eyes on the cross border crossovers, as their success or failure will no doubt foretell Ford’s.

Early Edge opinions are favorable. While not personally sold on the CUV, TTAC’s resident west coast wheelman Jonny Lieberman was impressed with the Edge's interior, engine, ride and handling. The buzz sounds promising; Ford reports that some 50k webheads have specced-up virtual people movers. FoMoCo hopes this translates into 135k units annually: a razor’s edge shy of one percentage point of the entire United States automotive market. With base models starting at around $26k, that translates into about $3.2b in much needed revenue. Given estimates of a crossover boom to 3.2m sales by 2010, the promise of profits by ‘09 could boldly move onto the horizon. Of course, there are a few “challenges” to that theory.

The Edge’s CUV competition is already a whole product cycle ahead of Ford. An estimated 1.6m SUV refugees have upped stakes for Dearborn’s foreign competition. This year, Nissan has flogged over 62k Muranos to Ford’s “Phil” and 16k FXs to his more affluent buds. Honda has reached out to 116k CR-V customers. In September alone, ToMoCo moved over 11k RAV4s and Highlanders. Each. The General has badge engineered troops ready to invade the segment and DCX is already there. And speaking of a cloak on invisibility, Ford’s Freestyle is [still] floundering about in this genre.

The Edge must lure the public back to the Blue Oval fold. Assuming it does, that’s one segment, one basket. Mark “My Title is Huge” Fields told the press on Monday that The Blue Oval plans to ride out the current vehicle lineup until 2008. Product led turnaround indeed! With nothing new in the pipeline, with its history of model neglect, any FoMoCo interest generated by the cross-border crossover is bound to cool, and quick. And then… nothing much.

Don’t take my word for it. After spending “a lot of time looking at the where the market is going,” Marky Mark Fields publicly declared that “on a scale of 1-10, the revisions to the 2007-08 product program rate a 2.” In other words, the market may have changed, but those ships have sailed. As for the products arriving at the end of the decade, Fields rates the amount of revision as “something like a 6 or 7.” 

That's four years away. No wonder the company is feeling, as the Brits would say, at sixes and sevens. Ford projects its market share to continue its decline, bottoming out at around 14%. Given that drop, given dwindling sales of profitable SUV’s, expensive production cuts/buyouts and their models' inherent cost disadvantages vis-à-vis non-union competition, it’s difficult to see how the Darlings of Dearborn can generate sufficient profits to keep the lights on. Selling fewer quantities of the same less profitable vehicles is no recipe for enlightenment. Even if the Edge becomes the segment leader, it’s only one product, and simply not enough to cover the losses left in the third seating rows of big SUVs.

In his first company-wide email, in his second week at the helm of America's soon-to-be third largest automaker, CEO Alan Mulally warned his [remaining] troops that Ford needs more than an Edge to keep its edge. “Pockets of success aren't enough. Not today. Not in this competitive environment. We need success across our entire enterprise. To get there, we need to have a universally agreed to and understood business plan. It needs to be a single plan, and it needs to work for the entire company.” What? A new new new plan? Apparently so. According to Ford's Thirty Five Million Dollar Man, this one will be built (remember: it’s a work in progress) around PEOPLE, PRODUCTS and PRODUCTIVITY. 

While it’s nice to hear that Alan's minding his P’s, there’s a big Q hanging over the entire enterprise: can Ford find more baskets and make some better eggs? Or, if you prefer, it remains to be seen if Ford's got the starships needed to re-boot and scoot.