For any journalist covering the American auto industry, The Big Two Point Five's insularity is a constant source of amazement. And so it has been, for well over six decades. Over the last forty years or so, the names have changed, but  the message hasn’t. The party line: “foreign” cars are a fad (especially the small ones), ours are as good as if not better than theirs, prosperity is only a couple of cars away and, oh yeah, it's all the union’s fault. One insider coined the perfect term for this combination of reckless denial and mindless optimism: “Grosse Pointe Myopia” (GPM).

Note the term’s geographic specificity; Grosse Pointe is the swanky suburb just outside of Detroit favored by highly-paid automobile executives. Every member of The Big Two Point Five– which includes no less than fourteen domestic sub-brands– are headquartered in and around Detroit. This concentration of industrial energy, all directed towards the creation of products within a single consumer category, is not the norm for manufacturers in most industries. Even within the car biz, America's insularity is without parallel.

Even in much smaller countries, there’s a greater physical separation between the main players in the automotive sector. In Japan, the Dai-san are separated by almost as much distance as they are in the US. While Honda, Nissan and Toyota all have offices in Tokyo, they also have “home turf” in very different parts of the country. Volkswagen, BMW and Mercedes all have their own lebensraum in a country roughly the size of Texas. Even SAAB and Volvo weren’t neighbors until they were bought. When it comes to cross-corporate cultural incest based on simple geography, Motown rules.

The biggest single problem with sharing your home base with your rivals: it stunts your perceptions. Every new development– whether it’s a design, technological advance, personnel policy or marketing technique– is analyzed in terms of what your not-so-friendly neighborhood competition is doing. The “what would BLANK do?” debate slows the adoption of new ideas, especially in manufacturing. It also retards the pace of innovation. After all, the “visible” competition is moving just as slowly as you are.

Equally important, Detroit and its environs are a terrible place from which to survey the domestic automotive scene. Even in the days when The Big Three ruled the American market, their distance from the left and right coasts made import-related trends seem much less important than they really were. Just about all the foreign competition made their first inroads on the coasts, away from Detroit (and nearer to where the economic heart was moving). Is it any surprise that The Big Two Point Five are most dominant in America’s economic backwaters, including their rustbelt fiefdoms?

Detroit is one of the few major metropolitan areas in the US where imported automobiles are still a relatively rare sight (and even this is changing). Like ancient potentates unaware of the barbarians at the gates, the current Kings of Detroit look out their windows and find false reassurance. Ford moved Mercury to California for this very reason. They scurried home soon thereafter; what the rest of Ford couldn’t see, didn’t exist.

Obviously, this plethora of monomaniacal, short-sighted executives wasn't trained from birth (though a large number of Detroit's movers and shakers are second and third generation automobile executives). Rather they’re plucked from a narrow range of design, engineering and B-schools. Those who fit the profile and succeed soon find themselves living in glass towers– literally– seeing the rest of the world through a strange prism of executive privilege. They know real customers don’t drive box fresh, hand-picked vehicles. They know they don’t fly first class or private jets. But the execs gratefully submit to the common, alternate reality, and, eventually, become oblivious to its distancing effect.

Of The Big Two Point Five, GM suffers the most from its GPM. Ford's recent decision to poach their new boss from Boeing reflects a historical willingness to hire executives from other auto companies and industries. A fair chunk of the Dai-san’s American management (especially Nissan’s) started with The Big Two Point Five. GM is different, a royalty unto itself, pure, unsullied, and inbred. The fact that their current CEO Rick Wagoner has never worked for a company other than GM tells you everything you need to know about The General’s terminal myopia.

Ford talks of Bold Moves. GM speaks of on-track turnarounds. Chrysler says wait and see. Meanwhile, Nissan’s moved to Tennessee. There is no question whatsoever that The Big Two Point Five should also up stakes and split town– for three different destinations. They can leave whatever technological and manufacturing operations remain in Michigan in Michigan, but their executives should abandon Detroit as soon as possible. It’s the best way for The Big Two Point Five to learn to see the world in sharp focus, as it really is. Only then can The Big Two Point Five start the process of psychological recovery that financial recovery demands. Otherwise, whether they like it or not, whether they know it or not, they're all going down together.   

The Chicago Mercantile Exchange just announced that it is merging with the Chicago Board of Trade Company to create a “juggernaught” in the world derivatives market. These markets allow farmers to hedge their bets, insuring their crop at a given price for a future harvest. Automakers have no such luck. They pour billions of dollars into developing a product and gamble that it will succeed in the market place. Recent Death Watchee Ford has made such a gamble with its new crossover vehicle, the Edge. Some say it must sell, or FoMoCo will bust out. Ford’s betting the proverbial farm on red. But is the Edge a sure thing?

According to the highly credible “Ford and GM set to merge” journalists over at Automotive News, The General has agreed to pay bankrupt parts supplier Delphi’s remaining union workers an unspecified amount of money for an unspecified amount of time to avoid a planet-killing strike. Yes, it’s The Mother of All Extortion Pay-Offs– providing you don’t count that huge pile of money GM’s already agreed to pay twenty thousand not-so-dearly departed members of the United Auto Workers (UAW) who labored on behalf of Delphi. And here’s the funny part: that’s the good news. 

As always, you gotta read the fine print. As part of this deal, Delphi will renegotiate or dump 5,472 unprofitable GM parts contracts. Let’s be clear: by “renegotiate” I mean Delphi got GM to lock-in the contracts the parts maker wants to keep, at a price that will earn them cash money. So there’ll be no more of that margin squeezing routine GM’s been using to torture its other parts suppliers. So Delphi can now afford to pay the base salaries of those UAW employeees that GM didn’t pay to leave, whose paychecks GM is about to top up so they don’t go on strike and kill GM. So it’s win, win, lose. The General's cash flow takes another massive hit and everyone goes back to the business of pretending the next group of vehicles down the line will pay for, well, everything.

Let's get to the really exciting stuff: the looming proxy fight between investor Kirk “The Las Vegas Lion” Kerkorian and GM CEO "Red Ink Rick" Wagoner. The way the Institute of Shareholder Services (ISS) sees it, Kirk stooge Jerry York’s recent resignation from GM’s Board of Bystanders was the first step in his any-day-now nonagenarian boss’s plan to stir up a shareholder’s revolt. For those of us who can’t tell a rabid dog when they see one buying 9.9 percent of the world’s largest automaker, the ISS took a look at York’s resignation and decided them’s fightin’ words! 

To paraphrase the document in question, things suck at GM and they might not get any better. And then… “But frankly, to get to the crux of the matter, I have not found an environment in the board room that is very receptive to probing much beyond the materials provided by management (and too often, at least in my experience, materials are not sent to the board ahead of time to allow study prior to board discussion).” Well now we know. GM’s Board of Bystanders is a board of bystanders who take Rabid Rick Wagoner’s assurances at face value and don’t mind if those assurances aren’t in writing, or, if they are, that they arrive too late to read and digest. Who’d a thunk it?

Only anyone who’s been watching The General’s market share sink like a stone thrown into a deep, dark, well. Mr. York’s description of GM’s most excellent rubber stampers shouldn’t come as any surprise to readers of this series, nor should York’s terse description of GM’s chances. York’s letter adds GM’s negative market share with its negative cash flow to come to a negative conclusion: “I have grave reservations concerning the ability of the company’s current business model to successfully compete in the marketplace with those of the Asian producers." Join the club.

Of course, Jerry's in Kirk's gang. Which makes his final parting words especially ironic: “I will shortly make arrangements to return the confidential company materials in my possession to the Corporate Secretary’s office.” This from the board member who swore to the SEC that he won’t reveal inside information to any third party, then jets off to France to meet with Nissan Prez Carlos Ghosn to offer him the keys to the GM castle on behalf of The General’s largest stockholder and chief boardroom protagonist. Does anyone seriously think Mr. York didn’t use his time in GM’s inner sanctum to gather-up enough damning evidence of management incompetence to convince outside investors to decapitate the capo di tutti capo?

Like I said, this is going to get ugly. And so it should. It’s hard to believe that the man who lost GM more than a dollar per person on planet earth and prestiged GM’s amazing shrinking market share is still large and in charge over at The General’s tower of power. The battle for control of GM is a yin yang thang– only there isn’t any yin. In fact, everyone who wields power in this sad saga of missed opportunity and unbridled greed is their own evil triplet; Kirk Kerkorian, Rick Wagoner and union boss Ron Gettelfinger are all as bad as each other.

The conflict between these three forces will eventually reveal the exact nature of their pernicious perfidy– at least to us. For them, it’ll be last man standing. Whoever wins will oversee a kingdom of sand, washed flat by an tide that’s been forty years in the making.

GM’s September sales figures are out. Despite generous Labor Day incentives, zero per cent financing to anyone with a pulse and an easy year-on-year comparison (GM was in the post-Fire Sale mode last September), vehicle sales are down seven percent. Given GM’s upcoming production cutbacks, there’s only one way sales can go from here: down, taking GM’s declining market share with it. Never mind. According to GM Exec Maximum Bob Lutz, "Whatever our market share stabilizes at in the US— 22, 23, 24 percent— I don’t really care. The idea that GM… has got to get back to 30 percent is a wacky notion with all this global competition we’ve got."

Obviously, Mr. What Me Worry? is a whack job. The fact that the septugenarian ex-Marine has any power whatsoever within GM– never mind his multi-million dollar annual salary, huge pension and Gulfstream perks– tells you all you need to know about GM’s ability to manage itself. At the risk of stating the obvious, shouldn’t the guy who calls [at least some of] the shots for the world’s largest automaker understand that the faster GM’s domestic market share shrinks, the closer The General gets to the tipping point of no return? Call me a weenie (SIR!), but I’d expect an ex-Marine to know when he’s fighting a rear-guard action.

By the same token, you’d kinda hope that GM’s so-called “car czar” would know that The General’s inability to find new homes for their cash cows is putting his employer in a world of hurt. Pardon me for not being a goldfish, but I distinctly remember Mr. Lutz standing on the running board of a new[ish] Tahoe telling the world that GM’s GMT-900’s would take the [declining] market by storm and save GM’s bacon. Well they haven’t. Yukon, Tahoe and Suburban sales are soft, and getting softer. Surely the opposite of success is failure, and the logical response to failure is to acknowledge the damage and formulate a new plan– rather than obfuscation, prevarication and denial.

Top execs like GM marketing maven Mark LaNeve may be happy spinning the dismal parade of declining numbers– claiming that rental fleet sales and limited production are clouding an otherwise bright picture– but the numbers don’t lie. GM is in a death spiral that no amount of “missing” Chevrolet Aveos, Cobalts and Malibus can cure. GM claims its GMT900 pickups are the next next big thing, but they simply can’t create enough cash flow to sustain The General’s distended product portfolio.

In fact, Maximum Bob put his finger on the nub of GM’s problem: the company has lost its ability to fight import owned competition. GM’s September sales results are bad enough, but Toyota’s are far worse– for GM. The Japanese automaker’s sales climbed a staggering 25%. And it wasn’t just parsimonious econoboxes fueling the company’s financial combustion chamber. Year-on-year sales were up for the Sequoia (37.7%), Land Cruiser (1.7%), 4Runner (8.9%), Highlander (16.1%) and RAV4 (93.4%). Bottom line: Toyota’s September SUV sales rose by an average of 54.8%.

The numbers are alarming in extremis. GM's new[ish] GMT900’s have not only failed to sell in absolute terms, they’ve also failed to stem the growing tide of customers abandoning domestic products for import-owned vehicles– on GM's home turf. As for cars… fuhgeddaboutit. “All this global competition” has left The General in a corner, fighting Ford and Chrysler for a dwindling supply of hard core domestic-buying consumers.Unless Ford goes belly-up first, unless GM's new products beat-back Toyota, Honda, Hyundai and the rest of the “newcomers;” the market share stability GM’s Car Czar seeks is almost impossible to imagine.

Meanwhile, reports are filtering in that GM CEO Rabid Rick Wagoner has finally called off the Nissan – Renault alliance talks. This may have a little something to do with new rules enacted yesterday by GM’s Board of Bystanders. The language is a bit convoluted, but the rules make it easier for the Board to remove pro-Renault investor Kirk Kerkorian’s man Jerry York, and prevent Captain Kirk from adding new members. So Rabid Rick’s covered his ass and told Kirk to take a flying leap. As we predicted, things are getting ugly over at RenCen.

The battle for control of GM is just beginning. Kirk is sure to retaliate against GM’s CEO, and The Lion of Las Vegas is nothing if not resourceful. Regardless who ends-up the last man grandstanding, the war's already been lost. GM’s products are falling further and further behind the competition in the sales charts. The recent cuts to the automaker's production and staff will help the bottom line, but they indicate that GM's is fighting harder and harder for less and less. At some point, the company will starve to death.

Yesterday, Automotive News reported that octogenarian GM investor Kirk Kerkorian is "frustrated with CEO Rick Wagoner's lack of enthusiasm for an alliance with Nissan-Renault." That's like the DEA saying it's frustrated with Bolivia's inability to curtail its cocaine exports. Kirk knows that Rick would sooner pull the ripcord on his [bankruptcy proof] golden parachute than green light a hook-up with the French. Which is why the Lion of Las Vegas responded to Wagoner’s “no deal” comments to the Parisian press by threatening to buy up even more shares in the ailing automaker: to force Wagoner into a corner.

We now know that the Nissan negotiations began after GM Board Member and Captain Kirk crony Jerry York held a secret meeting with Nissan boss Carlos The Jackal Ghosn. Forget strategic alliances and supplier synergies; York simply offered Ghosn Wagoner’s job. Setting aside the outrageous not-to-say-criminal impropriety of a GM Board Member launching a clandestine plot against his company’s Chief Executive Office on behalf of an outside investor, the play finally reveals the intent behind the whole lawyer-enriching GM-Nissan mishegos: to remove Wagoner from the helm of the world’s largest automaker. Period.

If you recall, Wagoner fended-off the initial attack by convincing his boardlings to put him in charge of analyzing the potential of the proposed GM-Nissan-Renault alliance (much like a Bolivian drug lord electing himself president to police drug traffic). At the Paris auto show, Rabid Rick did the pro forma meeting thing with Carlos, announced (again) that GM’s turnaround is on track thank you very much, and then, outrageously and ominously (considering GM’s cash position), suggested Nissan should put a couple of bil on the table. Kirk immediately threatened to buy 12 million more GM shares. Message to Wagoner: don’t fuck with me.

Captain Kirk holds 56 million shares or 9.9 percent of GM’s common stock. He bought the shares at an average price of $31.50. At Thursday’s $33.06 per share closing price, Mr. Kerkorian’s paper profit currently stands at $84m. Upping his stake by 12m shares would cost The Lion of Las Vegas a relatively paltry $400m. The purchase would put his total GM investment at well over 10% or roughly $2.25b. Should he make the move, the additional shares would give Kirk more clout to demand an “independent financial review” of the GM-Nissan-Renault deal. To that end, he’s informed the Securities and Exchange Commission that he wants to change his official status from a passive (!) to an “active” investor.

Obviously, there’s no good reason for Kirk (or anyone else) to buy a chunk of GM based on its long-term future. Despite Red Ink Rick’s steadfast claims that his turnaround plan is kicking in now… no wait… now… oh hang on… NOW, GM’s death spiral continues. Kirk’s inside man Jerry York knows that GM’s new pickups aren’t going to pickup enough business to save the company’s bacon. He knows that GM’s summer of deadbeat love, the company’s increased incentives on products both old and new, their aggressive “book the deal when it leaves the factory” accounting and the negative effect of this fall’s heavily curtailed future production all spell disaster.

York and Kerkorian are also aware that the domestic automobile market is only getting more competitive. The so-called imports make stacks of money in the US because their domestic counterparts are high cost producers who set a floor on pricing. It’s an open secret that Toyota, Honda, Nissan, Hyundai et al. could bury GM/Ford/DCX simply by lowering the prices on their vehicles. Toyota’s new Tundra is a step in that direction that’s bound to show that none of The Big Two Point Five’s products are safe from non-union competition.

All of which tell/reminds us that Kirk’s in it for the money. Hence Kirk’s decision to put Wagoner in a classic you’re fired if you do (hello Carlos!) and you’re fired if you don’t (where’s Carlos?) position. Once Captain Kirk replaces Wagoner, especially if it’s with The Jackal, GM’s stock price will rise. Kirk will cash out and that’ll be that– for Kirk. The General will still be in chaos. Whether or not the Jackal could then recreate The General as a profitable car company– without taking it into Chapter 11– is an open question we may yet see answered.

Things will get ugly if Kerkorian doesn’t get his way. For one thing, GM will have to show good financial results– even if they’re less credible than last quarter’s. GM’s accounting department has been sailing close to the wind for well over a year now. Federal regulators may flex their muscles post-November elections, perhaps aided by Jerry York (providing yet another way to axe Wagoner). In fact, this whole Kirk – Rick thing has become a Detroit death match. Anyone betting on Wagoner better hope that GM’s octogenarian investor forgets to take his medicine, or dies in the arms of Anna Nicole Smith.

After Germany’s unconditional surrender to Allied forces in 1945, the allies stripped the country of all its patents. Germany’s former Axis ally, Japan, eventually exploited this situation by plagiarizing and mass-producing legendary German cameras and lenses. Today, Japanese manufacturers continue to look to Germany for “inspiration.” Case in point: the 2007 Acura RDX. It couldn’t look more like a BMW X3 if it tried, and by God, it did.

The RDX Crossover Utility Vehicle (CUV) is one inch longer and a fraction wider and shorter than its German inspiration. Stylistically, the RDX is only a nip-tuck away from the baby Bimmer. The RDX’ steeply raked windshield, blackened B and C-pillars and tailgate spoiler all say BMW– and signal the Acura’s shared distaste for the rough stuff. The RDX is, in fact, another deeply metrosexual machine: a handsome manly form attired in delicate garments, whose manicured toes are meant for polished wingtips, not hiking boots. If you know what I mean.

Inside, Toto, I get the feeling we’re not in Bavaria anymore. The RDX’ cabin offers the all hushed minimalism we’ve come to expect from Honda’s upmarket homonyms. In fact, the CUV’s attention to tactility– from the meaty steering wheel bulges at the ten and two positions to the sensually shaped leather shift knob– takes us deep into Audi territory. That said, you can take the Acura out of Japan, but you can’t take the Japanese out of the Acura. The RDX’ three-ring gauges’ red-on-blue lighting strikes just the wrong note of Japanese spizzarkle. And the RDX’ climate control/media center shares Infiniti’s predilection for a high and mighty backwards tilting dash position.

The RDX’s traffic aversive satellite navigation system is voice controllable– which is just as well. The widescreen display is difficult to read in daylight, especially when the future's so bright you're wearing shades. The nav system and on-board computer are controlled by a distinctly phallic nubbin protruding through the center of the dash. Despite the gizmo’s indelicacy, its intuitive ergonomics put BMW’s iDrive to shame (as if it needed any help in that regard). As is the norm for this “so not an SUV” genre, cargo storage space is sacrificed on the altar of passenger comfort. Drivers with longer legs will find lots of room for their stems in either the front or rear seats, which provide much-needed lateral support.

The RDX is propelled by a turbo-charged 2.3-liter four-cylinder powerplant producing 240hp @ 6000rpm and 260 lbs-ft of torque @ 4500rpm. The much ballyhooed variable flow turbos keep the engine spinning at low revs, but it’s still not enough. The engine must climb above 3500rpms before it can get its boogie on. Fortunately, like all the best Honda power plants, this baby loves to twirl, redlining at 6800rpms. To keep the mill in the grunt zone, the RDX’ brushed-aluminum accented steering wheel (all the rage this year) sports F1-style paddle shifters. Unfortunately, the steering is a little slow; cornering tends to put the paddles out of reach.

Should you be so churlish as to engage in a little stoplight sprinting, the RDX makes the zero to 60 dash in a shade less than eight seconds. That’s respectable acceleration for a vehicle that weighs one Labrador retriever less than two tons and stands nearly 5’5” tall, but you’ll pay the price at the pump, diminishing the official 19/24 EPA mpg by a considerable margin. Worse yet, the new RAV4 V6 will best the RDX to 60 by more than a second.

A mid-day tear through the winding hills of Irving, Texas proved that Acura’s taut front strut / rear multilink suspension makes their cute ute feel light and tight– until you come to a corner. There’s no masking the leaning tower of SUV effect, or the vehicle’s tendency to nose-dive during hard braking. Acura’s Super Handling All Wheel Drive (SH-AWD), Vehicle Stability Assist and ABS systems conspire to keep the RDX’ wheels firmly gripped to the pavement, despite all the leans, pitches, rolls and yaws. For what it’s worth, the RDX is the best handling Crossover in its class. 

The RDX goes head-to-head against the similarly sized and priced fraternal twins, the Nissan Murano and Infiniti FX35, and the aforementioned BMW and RAV4. The RDX out-luxuriates the Nissan and Toyota, but still seems a little austere compared to the BMW and Infiniti. It straightens corners better than the others but has the least amount of straight line oomph.

Thanks to its superb build quality and [optional] mind-blowing surround sound, mp3-compatible stereo, I can’t imagine anyone sitting in an RDX, regretting purchasing Acura’s X3 knock-off instead of the “real deal.” Still, as I walked away from the RDX, I was left longing for a vehicle that holstered that sweet-spinning turbo four in something shorter, lower and lighter. Something like the Acura RL. Sometimes it’s best to just copy yourself, and call it good.

I'm good with names. Meet me at a party. Five hours and seven beers later, I'll cruise up and say, "Hey Benjamin, how goes it?" That’s assuming A) your name is Benjamin and B) you’re interesting. If a person is as dull as Tuesday afternoon C-Span, then the part of my brain that puts faces to names shuts down. I mention this because I had to click over to mazdausa.com to figure out if I’m driving the B4000 or B4400.  Turns out it’s the former. Who knew?

I remember reading about an environmental group that argued for zero population. Not zero population growth, zero people. They figured there was only one way to return nature to its, um, natural state: take humans out of the equation. I don’t recall their plan to achieve this goal, but I don’t think it involved automobiles. After all: no people, no cars, no pollution. Done. California’s tree huggers may not adhere to the same logical extreme, but c’mon, can someone please knock some sense into the state’s eco-warriors before they do something really stupid?

Yesterday, California Attorney General Bill Lockyer filed a lawsuit against Toyota, General Motors, Ford, Chrysler, Honda and Nissan. The suit alleges that these companies’ vehicles damaged the ozone layer hovering over California. The People seek unspecified financial damages for the diminution of the state’s snow packs, beaches, ozone layer and endangered animals. Clearly, The Golden State has kicked their anti-car agenda back into high gear.

Now we could ignore the political grandstanding that triggered this eminently dismissible lawsuit (they followed all your environmental regulations and you’re suing them?) and get into a debate about whether or not carbon dioxide is an environmental hazard. But let’s just assume it is. Is treating law-abiding automakers like criminals really the best way to sort out their products’ environmental impact? It’s like a bunch of social workers suing the Attorney General’s office for not forcing the legislature to pass more stringent laws against pedophiles, so they could enforce them. 

Of course, there are plenty of people who assume that automobile manufacturers are criminals. The movie “Who Killed the Electric Car” reflects the generally held belief that automakers are deeply, fundamentally corrupt organizations who will gladly sacrifice “the public good” for their shareholder’s gain. They’ll rip up mass transit lines, pretend they can’t build cars that get 100 miles to a gallon, subvert safety and environmental regulations, send jobs abroad, lie, cheat and steal— anything to avoid doing the “right thing.” The logical corollary: the carmakers’ [alleged] foot-dragging must be stopped at any and all costs.

Never mind that these same critics drive cars. Never mind that the society in which they live depends on the automobile for its social, economic and genetic well-being. Never mind that automakers have eliminated virtually all of their products’ harmful pollutants AND increased their fuel efficiency AND increased passenger safety AND maintained the finished products’ affordability AND generated billions in annual tax revenue AND created tens of thousands of skilled and unskilled jobs. Automakers– and automobiles– are the enemy within.

If you want to know where this is heading, look at England. In the name of public health, London hits-up motorists entering the city center with a “congestion charge." In the name of public health, large public areas have been pedestrianized and the number of public parking spaces reduced. In the name of public health, the government levies astronomical taxes on petrol, cars and car licenses. In the name of public health, the government dictates the number of houses that can be built, the number of parking spaces those houses can provide and the location of those houses (to minimize car use and maximize the use of public transportation).

Maybe you’re OK with all that. But the results aren’t exactly as intended. Car use (i.e. “pollution”) has continued to increase. Meanwhile, the country’s public transportation system has become extremely over-crowded (in addition to dirty, unreliable and expensive). Urban congestion (and jobs) has been exported to outlying areas. Decent, affordable housing for middle class buyers is practically non-existent. And speaking of class, motoring’s prohibitive expense puts automotive ownership completely out of reach for lower income workers and lowers the standard of living for the middle class. This situation does nothing to alleviate class resentment, and much to increase it.

And that’s the single biggest issue facing those who would seek to limit America’s automotive “addiction”— whether they know it or not. The automobile is, literally, social mobility. Cars are the platelets in the body politic. By keeping cars and car ownership relatively cheap, our populace can feed outlying areas with employment and business, spreading economic well-being both socially and geographically. Of course, detractors would argue that our cars are also spreading pollution and environmental destruction further and faster, but they’re missing the point.

Politics is supposed to be the art of compromise. If you view the car as a planet-killing demon and move to restrict its use, or try to tax it to death, or regulate it into a corner, success will evoke the law of unintended consequences. Greenhouse gasses may be a threat to our children’s future, but there are other threats we should also consider before we take drastic steps to “solve” the problem. Perhaps California should work with automakers, rather than against them.   

Auto industry analysts have cast their beady eyes on The Blue Oval's third turnaround plan, and they don’t like what they see. Despite the fact that Billy and Alan and Mark have mashed the gas on Ford’s downsizing, there are ominous rumblings that the cuts aren’t deep enough. The assertion is almost as shocking as the cuts themselves. If asking all of your 75k union workers to piss off isn’t enough, if shuttering sixteen plants doesn’t cut the financial mustard, well, is there any end to this death spiral?  Only the obvious one.

To review: Ford wants to jettison 30k members of the United Auto Workers (UAW). The analysts are saying it ain’t gonna happen dot bomb. FoMoCo’s assembly liners are younger than GM’s. Ford’s $140k lump sum payoff offer matches The General’s, but Ford workers’ relative immaturity means their pensions would be significantly smaller. Some analysts are predicting that Ford will fall short of its workers-out-the-door goal by 10k union members– raising the specter of yet more deposits into Ford’s infamous money-for-nothing jobs bank.  

But that’s not what’s preoccupying prognosticating pundits. They’re concerned that Ford hasn’t named the final two factories they plan on shuttering. While this website has attributed Ford’s secrecy on this matter to political concerns (i.e. not pissing off friendly pols in whose districts the axe will fall), the rest of the crystal ball set see it differently. They consider the mystery a reflection of confusion, indecision and poor product planning (i.e. business as usual). In other words, if you don’t know what you need to build, you don’t know what not to build and where you shouldn’t be building it.

Addressing the topic in Automotive News, Catherine Madden, senior analyst at Global Insight, left her word mincer at home. "This indicates that Ford doesn't have a clear handle on what their product plan strategy is beyond 2008." Analyst Glenn Mercer was equally forthright: "The implication is that they haven't really figured this out yet, and if that's the case, one has to wonder what they have been doing for the past six months — or six years."

These number crunchers reckon that Ford’s production cutbacks will peg the company’s capacity utilization (actual output vs. potential output) at 84%. That would leave The Blue Oval Boys with excess production capacity equal to 500k units. That’s not good; Ford has to pay for this unused, unprofitable potential. Ford spokesman Oscar Suris’ counter: we’re getting there. In fact, if we hit 100% capacity utilization any sooner than our new new 2010 target date, we’ll have to surrender sales and/or invest in costly retooling.

Surrender sales, indeed. The industry analysts' calculations are based on Ford’s projection that it’ll capture 14% of next year’s domestic car market. If they don’t hit that target, even the 84% utilization figure will look like wishful thinking, and the automaker's profitability by '09 pledge will have as much credibility as cold fusion.

Obviously, it all comes down to product. According to Ford execs, the company’s got the goods to hold the fort, and maybe even fight a skirmish or two. They put tremendous stock in the $26k Edge. But back when the Mercury Montego (a badge engineered Ford 500) was launched, John Fitzpatrick predicted "We expect to conquest about 40 percent, meaning 40 percent of our Montego customers will be people who are outside the Ford family right now." 

It didn't happen, but it must, and soon. In order to survive, Ford must lure non-Ford buyers into the fold. Although the media quite rightly focuses on the need for Ford to build gotta have products, the window of opportunity may already be shut. Think of it this way: Toyota, Honda, Nissan et al. didn’t establish segment dominance simply by building good products. They built good products in segments where American cars sucked. Now that the shoe is on the other foot, it’s worth noting that the so-called imports’ products don’t suck.

Perhaps there is merit to this whole “Bold Moves” thing. It seems pretty clear that Ford no longer has enough cash/time to make the incremental changes that could gradually win it enough business to stay in business. Maybe it’s time for the Blue Oval to do a Walt Disney: bet the whole company on a radical new product. Ford has a long history of creating exciting concept cars; cars that could legitimately be called segment busters. Who was it that said history is bunk? Screw the past. Build some weird shit. If we heard about some bold moves on the new product front, we’d have reason to hope. But we don’t, so we don’t.    

The idea that Ford and GM will merge or, as they say these days, “form an alliance” is yet another sign that we’re reaching the End of Days, Detroit style. Sorry, haven’t you heard? This morning’s Automotive News quotes proverbial “senior executives” and “sources familiar with the talks” as saying GM contacted Ford shortly after GM investor Kirk Kerkorian invited Nissan to crash The General’s going away party. Or was it the other way around?  Automotive News is wildly, absurdly, irresponsibly vague on the whole story. Suffice it to say, any merger between America’s Number One and Number Two automakers would kill both of them.

Throughout this Death Watch series, commentators have insisted that a GM bankruptcy defies contemplation. The US economy would be plunged into chaos. OK, with so many foreign-owned automakers plying their domestically-constructed wares, a kind of mini-chaos. But there’s no doubt the knock-on effects of a GM Chapter 11 will be on the major side of major— from tens of thousands of jobs destroyed to millions of GM warranties rendered worthless (ironically enough). Now, imagine if that bankruptcy involved both GM and Ford at the same time. The mind boggles.

Aside from the obvious downside, who in their right mind believes that GM and Ford would benefit from a hook-up (other than some Wall Street Journal fantasists back in July)? The two companies suffer from chronic obesity. As this year’s massive cuts show, both The General and The Blue Oval have too many factories, assembly workers, executives, health care costs, pension costs, brands, models and dealers. At the same time, both carmakers face financial anorexia. They have too few attractive products to generate sufficient operating capital to stay in business—at least in the longer term. In the short term, they’re both failing companies.

With no immediate prospect of relief. If fact, GM and Ford are headed for the massive coronary known as the United Auto Workers (UAW). As it has for the last thirty years, the 800-pound gorilla in the room calls the shots. And it's feeding time at the zoo; their contract is up for “negotiation.” Any merger between the two automakers would require the tacit approval of the unions, who are no more likely to make concessions to a new “Big Red One” than organize Chinese labor.

And what of corporate cultures? Ford is a family firm whose stultifying bureaucracy and deeply entrenched corporate fiefdoms have rendered their business commercially impotent. GM is a confederacy of business school dunces whose stultifying bureaucracy and deeply entrenched corporate fiefdoms have rendered their business commercially impotent. Put them together and what have you got? What’s the opposite of synergy? Overlap, on a scale so epic it makes Ben Hur look like a home movie.

Can you imagine trying to create a single, effective dealer network with a coherent range of products that incorporates both company’s eight brands and [well] over a hundred models? If you think that GM’s product range makes no sense, A) you’re right and B) combining Ford and GM’s products lines would define the word “farrago” for all time. On the dealer level, well, if GM and Ford can’t cut down/amalgamate their retail “partners” as they are, what are the chances the two of them could do it together? Would it even be legal?

Perhaps the most bizarre part of this bizarre unsubstantiated rumor is the fact that anyone gives it credence. The mere existence of this merger idea in the intellectual space normally reserved for turnaround talk and BM’s (Bold Moves) indicates just how desperate things have become. If Wall Street reacts positively to this non-news, you’ll know that the world has gone insane. Of course, they’re been reacting to GM’s obfuscation and Ford’s Jump Down Turnaround (pick a bail of debt) with good cheer, ignoring the broken business basics that are dragging– have been dragging– both companies into oblivion. So, I suppose anything is possible.

But not desirable. Yes, a GM / Ford merger would “reinvent” the American automotive scene, creating a behemoth that we haven’t seen since, um, GM was healthy. But its success would depend entirely on wholesale slaughter— something neither company has been able to achieve on its own. And that’s because the only way they could affect the requisite root-and-branch change is… bankruptcy. You first?  No, after you. No after you. I know; let’s go together! No, after you. No, after you.

The American automotive media is just as obsessed with the thrill of the new as the industry itself. Even though websites like this one (OK, not exactly like this one) have transformed two month lead times into two minute lead times, all the buff books still tout the latest hot machine. The industry colludes in this effort, withholding new vehicles from their US press fleets until the car mags hit the stands. Perhaps because we started at the bottom of the press car food chain (and worked our way downwards from there), TTAC isn't fixated on getting ahold of the latest and greatest. In fact, we consider the dearth of established models in the carmakers' press fleets (e.g. Nissan 350Z) a major disappointment that reflects the automakers' limited attention spans. There is a lot to be learned from well-established bread-and-butter vehicles. To wit: Jonny Lieberman is reviewing a Mazda B-Series pickup and Sajeev Mehta's Lincoln Town Car review just crossed the transom. These reviews will tell us more about why Ford is in such dire straits– missed opportunities– than any financial statement or ride in the new Em Kay Ex Lincoln. Of course, as the Brits put it, we wouldn't say no…   

The history of the domestic automobile industry is a history of mergers and acquisitions. When times are good, the big fish eat the small fish. When times are tough, the big fish go to school. Witness Ford’s SUV-financed spending spree (Jaguar, Land Rover, Aston and Mazda) and the Daimler/Chrysler and Renault/Nissan mergers. At best, the long-term track record for acquisitions has been spotty, and alliances are equally likely to end in tears. So why do automakers persist?

Acquisitions possess a seductive logic: the “no fear” factors. Factor one: taxes. When a big automaker is doing well they have piles of money lying around. Buying up the competition keeps the taxable profit lower. Factor two: the art of the deal. Many auto industry executives hail from the world of finance. (GM CEO Rick Wagoner is a Harvard MBA.) Pulling off a big acquisition or orchestrating a huge merger is their “project car.” Factor three: capacity. Buying someone else’s production– and, hopefully, customer base– is cheaper and more efficient than building your own from scratch. Yes but…

Troubled automakers are almost always not what they seem. BMW bought Rover thinking it was securing an outlet to the UK’s mid-market. Unfortunately, by the time the Bavarians assumed control, Rover had lost most of its capacity and moved up-market to try to stay afloat.  Instead of gaining entry into the middle of the market, the Germans bought the original “English Patient.” GM bought Saab in 1990 to grow a global luxury brand. After spending $1.5b and pouring a couple more billion down a Swedish sinkhole, The General discovered the brand’s glass ceiling: a limited appeal to a limited market willing to pay a limited price.

And speaking of cross-cultural coyote dates, voracious multinationals seem to forget that acquisitions come with their own traditions (i.e. entrenched bureaucracy and petty fiefdoms) and factories (usually old and in the wrong place). Isuzu, Suzuki or Mitsubishi are gold diggers on the prowl: top-heavy companies offering corporate suitors little more than engineering skills and expensive Japanese factories located in a mature market. For these reasons and more, most acquisitions fail miserably and hang around interminably– or at least until the execs responsible leave the company.

Mergers don’t fare much better. Chrysler accounts for the US auto industry’s two most recent mergers (absorbing AMC and being absorbed by Daimler). Fortunately, in both cases, one company was clearly stronger than the other, avoiding many of the problems inherent in any attempt to combine two corporate cultures. Even so, the first merger helped drag the company into bankruptcy, while the second only threatens to do the same.

History tells us Chrysler’s flirtation with oblivion is no exception. When Austin and Morris merged in 1952 to form BMC, the merged corporations maintained separate dealer networks, factories and management identities. As things went downhill, more companies were added to the mix. When Rover finally rolled over and died, it took with it the remains of over a half-dozen carmakers, all united by failure. The modern equivalent could yet be Hyundai merging with Kia: two rival companies with nearly identical product lines and deep-rooted management cultures.

Brand overlap is yet another merger-related nightmare. All car manufacturers’ line-ups span a number of price points and sizes. Adding in a former competitor necessitates realignment and pruning which, again, creates tremendous internal friction. And that’s on top of the fact that the whole point of buying a new brand is to grow sales, and those sales have to come from somewhere, and that somewhere is the industry equivalent of the horror movie's “he’s in the house!” Not to put too fine a point on it, the end result is often a major clusteryouknowwhat.

For example, while Ford has had success with keeping Mazda healthy (if static) and growing Volvo, you could easily argue that this progress has come at the cost of losing sales from (or simply neglecting) Mercury and Lincoln. Meantime Jaguar tried and failed to go down-market (more trouble for Lincoln).  GM has had it even worse with Saab, especially since they started moving Caddy into the “sporty” side of luxury.

Common sense says it’s always best to stay focused, be your own man, hunker down and do a few things well– rather than gobble up a competitor and squander your resources on ill-advised brand extensions. Unfortunately, the auto industry tends to attracts egomaniacal leaders who see danger as an opportunity, rather than danger. When they're flush with cash, Empire building sings its siren song. As Ford eyes-up Renault, and other automakers eye Ford’s cast-offs, a word of unsolicited advise: look after your own house before coveting thy neighbor's.

Car names are a happy hunting ground for motoscribes and headline writers. Nissan Armada? Please. Versa? Vice springs immediately to mind (and not because of any other websites I may or may not have visited recently). I'm not sure if Nissan was trying to flummox the press when they settled on Qashqai as a name for their new "cute ute," but I reckon it's a big mistake. First, naming a vehicle after an obscure ethnic tribe is a bit too me-too, what with the Toureg already twisting tongues at VW dealerships worldwide. Second, the Qashqai are a semi-nomadic, Farsi-speaking Shia Muslim tribe based in southern Iran. Nuff said? Third, it's unpronounceable. I've scoured the web, and still can't find a phonetic spelling. (Little help?) And fourth, capitalizing on a tribe's identity without paying them for the privilege ain't exactly what I'd call PC. Meanwhile, Spinelli and I kick around Mr. Mulally's appointment at Ford. Figuratively speaking. 

Last Friday, Ford announced its largest production cuts in over two decades. The bold (not to say unavoidable) move comes in the face of evaporating truck sales; even large discounts on the formerly formidable F150 and Explorer can't move the metal faster than it's being built. With a debt rating that’s sleeping with the fishes, with the company’s “Way Forward” recovery plan in triage, with another disastrous quarter only days away, Ford is looking increasingly, irredeemably desperate.

The cutbacks are large in both scope and scale. Ford’s rolling production blackouts will hit ten assembly plants in total. The Blue Oval Boys will reduce output by some 21% for this year’s final financial quarter, shrinking total vehicle production to just over three million vehicles for the year (roughly nine percent behind ‘05 totals). Ford truck plants will fare the worst, losing 404k units from previous annual output targets.

That's not good. Last year, Ford’s F-Series pickup trucks accounted for nearly a third of the company’s 3.2m US sales total (or more than seven times Volvo's American sales). For the first time in three years, the F-Series will not reach its sales target— not even the revised 900k mark recently put forth by embattled CEO Mark Fields. With over 270k units depreciating on dealer lots, America’s best selling truck will bear the brunt of at least half of the cuts.

No matter how you look at it, coming-up short is gonna hurt. Ford’s Michigan Truck factory was once one of the world’s most profitable production facilities; through the late 90’s, it generated some $10b in annual revenue. While Ford doesn’t divulge production costs or profit margins for its individual vehicles, analysts indicate that each F-series pickup delivered $13k in profit. The evaporating truck market has put Ford’s cash cow on the barbie, and there aren’t any newborns ready to lactate greenbacks on their behalf.

Falling revenues are only half the problem. J.P. Morgan analyst Himanshu Patel figures Ford’s decision to downsize production will cost the company $1.4b this year, and around $2.7b in 2007. The main reason: Ford’s current contract with the United Auto Workers (UAW). Idled union workers will receive a Supplemental Unemployment Benefits (SUB) package. After an initial period of partial government support, Ford will have to pay them 95% of their normal take home pay for a 40-hour work week, for not working.  Union members with at least ten years’ service will still receive full employer-paid health insurance.

Looking ahead, the UAW contract also stipulates that no union worker can be laid off for more than 48 weeks due to a decline in sales or production. While it’s doubtful that production would halt for that long, the 48 weeks is cumulative for the entire four year agreement. Short term, expanding their blue collar buyout program is the only way for Ford to staunch their “death by a thousand cuts” labor cost wounds.

Unconfirmed reports indicate that Ford will put buyout offers on the table to all their hourly workers in the next week. UAW V.P. Bob King has already stated that he could convince his brothers to stay home– for the right price. But none of this will solve Ford’s cash crunch. Only an immediate series of blockbuster new products and a new, more favorable union contract can do that— neither of which is likely.

Again, there's no immediate relief on the product front. Sales of fuel-sipping B-segment cars are up 43 percent and growing. In most urban markets, Honda, Nissan and Toyota dealers can’t keep up with demand for their Fit, Versa and Yaris, which are selling at full retail or, wait for it, better. Despite finally admitting the seriousness of this market, Ford has yet to announce a B-segment buster.

Meanwhile, Ford’s desperation is there for all to see. Yesterday’s announcement that FoMoCo would follow GM’s lead and offer up to 72 months of zero percent financing to anyone with a pulse is a clear-cut indication that Ford is willing to do anything to stay in business— including cheapening the brand and mortgaging their future. Ford isn’t even trying hard to hide the fact that they’ve thrown open their doors to sub-prime borrowers. "If you were on the margin for being approved for a loan,” Ford flackmeister Jim Cain said. “You are more likely to get a loan today than you were a week ago."

The question is, is Ford more likely to avoid Chapter 11 than it was a week ago?  Ford's market share is still declining rapidly– from last year's 25.7% to this year's 18.1%. The company would like you to believe that the production cuts reflect a new, new realism and demonstrate management’s courage to make difficult decisions. Which may be true. But the old maxim “You can’t cut your way to prosperity” is just as true for Ford as it is for GM and DCX. Ford is still poised for breakup, merger or bankruptcy.

Timing is. Everything. Case in point: Toyota is about roll out its re-designed Tundra. The full-size pickup represents a huge investment for the automaker, including a brand new factory deep in the heart of Texas. By all accounts, the new Tundra will hit the market just as “lifestyle” load luggers have left the building, abandoning the genre for smaller, more fuel efficient machines. But as bad as Toyota’s timing may be for their corporate aspirations, it's worse for the so-called domestics.

It’s no secret that the majority of The Big Two Point Five’s profits (such as they are) come from SUV’s and pickup trucks. Nor is it a revelation that the enormous profits generated by the genre during the last two decades enabled their short-sighted product lethargy. Now that America’s truck optional buyers are leaving their gas-guzzling leviathans in droves, the Big Two Point Five are feeling the pain of putting all their eggs in a truck-shaped basket.

The Mustang is the only main-line car generating significant profit for Ford, and both GM and Chrysler are building direct competitors. DCX has the 300 and the Caliber, but their product mix is still heavily skewed towards SUV’s and pickups. GM is thoroughly truck-dependent. All three companies are busy retrenching, slicing production to match the new marketplace realities. All are incurring huge costs. When it comes to their line of profitable pickups, none are looking for a fight. But a fight is what they’re gonna get.

Many industry types scoff at the prospect. Toyota has been selling full-size pickups of one sort of another for over a decade, without great success. Nissan’s Titan jumped into the fray a couple years ago, to equally modest sales. Their failure to crack this money rich market segment begs the question: what have The Big Two Point Five done right?

Possibility one: the so-called domestics make great trucks. Despite general problems with vehicle quality, the Big Two Point Five have managed not to create a large pool of angry pickup truck buyers. Sure, they’ve built some duds, but nothing dire enough to alienate customers. The foreign owned automakers’ “full size” pickups have also been rather smaller, to no great advantage.

Possibility two: loyalty. The so-called domestics tout loyalty as their trump card, and concentrate their attention on beating each other up. But loyalty hasn’t kept foreign-owned automakers from making inroads into the compact pick-up business. And it hasn’t stopped Toyota from overtaking Ford in the overall U.S. sales chart.

Possibility three: luck. It’s not what Ford and GM have done; it’s what Nissan and Toyota haven’t done. Until now, Toyota and Nissan haven’t built the right products or added enough production capacity to build a significant number of pickups trucks.

Toyota is set to attack on all fronts. The company has spent hundreds of millions of dollars to create a Tundra that’s a match for the industry leader, the Ford F150. The new Tundra is bigger and stronger; more macho, durable and comfortable than any previous Toyota entry. If that isn’t enough to lure brand loyalists, Toyota will do whatever it takes to recoup their investment. With new American production capacity north of 250k units per year (and room for more), Toyota will react to market indifference by launching a price war.

There are two main reasons profit margins on pickup trucks are so high: supply and demand. In the last few months, U.S. pickup sales have tanked, flooding dealers with product, forcing incentives, driving down margins, slicing profit. The injection of tens of thousands of new Tundras into the market will surely accelerate this trend. Toyota’s non-union cost advantage, their never-say-die, take-no-prisoners attitude and their deep pockets all guarantee that it's only a matter of time before they undercut prices and force the so-called domestics’ to pare pickup profits to the bone.

Initially, the fleet sector may see the most action. On its home turf, Toyota puts a lot of energy into grabbing fleet clients to sew-up market share. Fleet buyers are far less brand loyal than private buyers; business owners are far more amenable to rational arguments. You can bet Tundra salesmen are busy boning up on their cost of ownership charts.

Truth be told, the so-called domestics are well-positioned to stave off the threat— at least in the short term. Their pickups may be mechanically simple, but they’re highly evolved with more than reasonable reliability. No matter how good Toyota’s Tundra or low its price, conquest sales will be a bitch. But The Big Two Point Five are vulnerable; they can’t afford to fight on price. They need every pickup truck buck to fund their new product plans. DCX may not suffer badly (for now). But Ford and GM are so cost-heavy, cash-starved and product deficient that fierce pickup competition could mean that their time at the top of the heap is finally over.