Last month, Toyota sold more vehicles in North America than Ford. Understandably, The Blue Oval Boys have refrained from public hand-wringing over their displacement in the US sale charts. But there is no underestimating the development’s damage to Ford’s corporate psyche. Newbie CEO Mark Fields was already deep into crisis management. Now, suddenly, it’s obvious that Ford’s turnaround cannot rely on pushing (deeply discounted) products and hoping and waiting for a Hail Mary pass. A brand new plan is set to be hatched at the end of the third quarter. The way forward is now in fast forward.

Like GM, Ford is downsizing to match market share. According to Harbour Consulting, Ford used 79% of its production capacity in 2005 (FYI: Toyota’s plants ran at 106%). Originally, Ford planned to close fourteen plants (including seven vehicle manufacturing facilities) and “cut” (a.k.a. buy out) 30k union jobs within six years.  The new plan: lop a couple of years off the timeline. Speaking to industry analysts yesterday, Ford manufacturing chief David Szczupak promised that FoMoCo will use 100% of its production capacity by 2008.

The clock is ticking. Although Ford has a $23b cash hoard (Health Care fund included), the company needs $16b to keep the assembly lines rolling until the next product cycle. No wonder Ford is thinking outside the Oval. The sale of parts bin diva Jaguar and reliability krypton Land Rover is reportedly only a buyer away from happening. [As Mazda and Volvo account for some 75% of Ford’s current value and provide mission critical product integration, their sale is highly unlikely.] Ford Motor Credit and bailed-out parts supplier Visteon may also be in play.

With so many cards on the table, Ford has followed GM’s lead and turned to a high profile consultant for advice: Kenneth Leet. In 2003, President Bush asked the 18-year Goldman Sachs vet to be his undersecretary for domestic finances. That gig didn’t pan out. But when Billy Ford called Leet for similar guidance, Leet showed why bullshit walks (exact contract unknown). The mergers and acquisitions guru is reported to be on the prowl for alliance(s) with other automakers.

Nissan is the most likely target. Despite the initial rise in stock prices prompted by a possible partnership with GM, a Ford – Nissan alliance makes more sense. (Not much, but more.) Although the UAW would rather accept the bubonic plague than see Carlos Ghosn prowling Ford’s HQ, his arrival on the scene would certainly shake up the joint, and give Blue Oval’s Brass insight into Le Cost Cutter’s management style. Renault and Nissan would gain access to Ford’s distribution networks.

Yes, well, the Ford family holds 40% of FoMoCo’s voting rights. With such an oligarchy at the tiller, any outsider seeking a merger or alliance would be extremely wary. The set-up has triggered some fanciful talk. Rumors have the Ford family purchasing 1.9b shares needed to take the company private. For roughly $13b, Ford could find the way forward without the hassles of the SEC, the press or interim profit reports. While FoMoCo stock may appear cheap at the moment, it’s highly unlikely that the Fords would want to raid their personal portfolios for such an enomrous gamble. What does that tell you? 

Well, listen to this from today’s Detroit News: "The market for subcompact autos in the United States could reach 600,000 units annually by the end of the decade, according to Mark Fields, president of Ford Motor Co.'s Americas group. But he says Ford will not enter this growing domestic segment until it has something different to offer consumers." At the very moment Toyota’ small cars are eating up the US market, at the very moment Ford should be rushing a killer B-segment car to market, Fields is publicly declaring a “wait and see” approach.

This from the same man who admitted that America’s bold move to more fuel-efficient vehicles is not a passing fad. "I'd rather be proactive than wish things would go back to where they were,” Fields told analysts and reporters. “Because I don't think they will.” Don’t look for much fuel conscious proactivity over the next six months. Yes, nine new Ford vehicles are set to hit the market in that time frame. But we’re talking about a Mustang variant (based on the Hertz edition GT-H), a four wheel drive Fusion and Milan (same car, different wrapper), an F-150 with greater towing capacity, the Edge crossover, a refreshed Ford Expedition (thirsty) and Expedition EL (extra thirsty). 

It’s two steps way forward, one step way back. Although Fields remains publicly committed to putting Ford back in the black by 2008, it’s hard to imagine how he could achieve the goal.  Ford will announce its accelerated restructuring plan by the end of the next month— at the same time its third quarter results hit the street. 

Last Thursday, Mark LeNeve declared that General Motors has “turned a corner.” Obviously, GM’s Vice President of North American Sales and Marketing was unaware of the phrase’s historical baggage. To wit: General William Westmoreland’s famous announcement that the American war effort in Indochina had “turned a corner”– just before North Vietnam’s Tet Offensive returned the corner. Since ‘68, any US authority figure announcing an angle exceeded instantly reveals themselves as a master of unintended irony, and sets themselves up for an ignominious defeat.

Metaphorical misstep aside, LaNeve’s triumphalism seems to reflect normal corporate dishonestly. Surely LaNeve was simply lying when he claimed that “interest in new vehicle models such as the 2007 Chevrolet Tahoe SUV and a potential sales lift from upcoming products are helping put GM back in contention after excruciating declines in recent years.” After all, the statement is positively dizzy with spin. “Interest in new models” (as opposed to actual sales) is leading to a “potential sales lift” (as opposed to an actual sales increase) which is “helping to put GM in contention” (as opposed to putting GM back in the black) and reversing “declines in recent years” (as opposed to, say, declines during LaNeve’s tenure). But no, I honestly believe LaNeve honestly believes the unbelievable: that GM’s on the rebound.

You see, the thing is, the above statement about GM’s prospects isn’t a direct quote. It’s paraphrasing provided by automotive journalist Brett Clanton. In a Detroit News article on the GM Veep’s unbridled optimism, LaNeve’s surrogate spinmeister failed to provide any evidence for “growing signs that a massive turnaround effort at GM is gaining strength.” Sure, the article flags several ways GM could be derailed by “factors outside its control.” But its tone, tenor and existence all indicate that LaNeve’s comments reflect an accepted Detroit shibboleth: GM’s on the rebound!

By now, even casual observers know GM’s unofficial turnaround strategy: we’re gonna do what we’ve always done better than we’ve done it in “recent years.” Remember those intractable problems that brought us to the brink of bankruptcy: legacy and labor costs, bureaucracy, a bloated dealer network, badge engineering, ill-defined brands, etc.? Forgeddaboutit. We’ll just sell our best assets, close some factories, pay-off some workers, release a dozen or so new products (most of which look suspiciously like the old products) and everything will be allllllright.

My God, how wrong can you be? At last Wednesday’s press launch of GM’s new(ish) pickup trucks, GM Car Czar Bob Lutz once again explored the possibilities. “The effect [of high gas prices] will decrease over time as people adjust to the thought of $3 a gallon, just as they did when it was $2 a gallon and just as they did when it was $1 a gallon.” In other words, sooner or later, GM’s truck sales will return to “normal” and everything will be allllllright. And then GM CEO Rabid Rick Wagoner stepped up to the microphone and raised the stakes on Maximum Bob's bluff. GM’s new(ish) pickups are “the most important part of our North American turnaround plan.”

If that statement doesn’t send a shiver down Detroit’s collective spine, nothing will. Last month, GM’s pickup truck sales slumped thirty-two percent. While that’s a year-on-year comparison against last summer's Fire Sale For All program, it’s clear that GM’s second string cash cow is being gored by gas prices and, less obviously, a downturn in the housing industry. A SMALL company called BIGresearch says over 50% of pickup truck drivers planning on buying a new vehicle in the next six months are considering a more fuel efficient sedan or… wait for it… a hybrid.

Shrinking market? You betcha. Less profitable market? Uh-huh. Ford’s dropped the price on America’s best-selling pickup (the F150) by $1400. Toyota is about to enter the fray with its keenly priced, full-sized Tundra. Bottom line: the pickup truck market is contracting even as margins are being squeezed. At best, GM is about to make a great landing at the wrong airport. At worst, it’s missing the boat.

In today’s market, small cars are where it’s at. If GM thinks the Cobalt and Aveo can carry the corporation through another gas price escalation— even as Toyota, Nissan and Honda flood the market with their latest fuel-sipping econoboxes— they’ve got another thing coming. I reckon it starts with a “b.”

But even if you dismiss the possibility of Chapter 11, why do GM watchers grant the company turned around status when its leaders [continue to] refuse to provide a timeline or targets for a return to profitability? Mark LaNeve’s and his supporters may hide behind vague claims that they can see the light at the end of the tunnel, but they fail to understand that the beckoning light in the distance is… death.

Although GM’s woes are increasingly well known, the House of Ford is also in dire straits. The Blue Oval’s credit has been downgraded almost as often and deeply as The General’s. FoMoCo’s products– a truck-heavy mix in a time of fuel conscious fervor– languish on dealers’ lots with equal abandon[ment]. Both companies have too many lackluster products, confused brands and mainline dealers. In fact, other than the size of their relative problems, the chief difference between GM and Ford has been the Blue Oval’s bluster, bold moves and all.

In the first half of ‘06, Ford's US market share slumped another four percentage points. In the first financial quarter, the company suffered a $457m loss. In the second, they took a $254m hit. No surprise there. Even the F150, America’s best selling pickup truck and Ford’s perennial cash cow, seems welded to dealer lots (down 46% in June). To move the metal, Ford has increased incentives and lowered prices on models both old and new. And even the ones that've moved out are coming back; the company has just recalled 1.2 million trucks, sport utility vehicles and vans for potential engine fires. Ford needs something to pull itself out of its corporate tailspin. As Taylor Hicks might say, what are the possibilities?

Nothing much. Even with accelerated product development, it will be two to three years before Ford can readjust its product line to match the new sales environment. Most of Ford’s ‘07 to ‘10 models will be SUVs and pickups. At the same time, Ford is pulling the plug on its big rear wheel-drive sedans and ill-fated minivans: the Mercury Monterey (down 40%) dies next month and the Freestar (down 20%) goes away in April. FoMoCo’s move to deep-six (rather than re-engineer) their big sedans and people carriers when the American market is flooding with SUV refugees reflects a lack of resources, imagination, will or all three.

Ford has also failed to refresh their fuel-sipping, dynamically superlative Focus– before it fades away like the once-great Taurus. And they've decided to shelve their well-publicized goal to build 250k hybrids by 2010, despite a huge jump in Escape Hybrid sales. Playing the flexible fuel card instead may earn Ford the environmental brownie points it seeks, but hyping vehicles that run on a fuel that’s not commonly available that gets worse mileage than “normal” gas will do nothing to cater to America’s changing vehicular tastes.

Fortunately, there are a few reasons to be cheerful.  In the short term, the Hecho en Mexico Fusion/Zephyr/Milan continues to depart dealer lots at around 19K units per month. Equally heartening, the Fusion and its badge engineered siblings are mining a rare vein of consumer loyalty; 93% of Fusion owners say they’d recommend the model to a friend. Yes but– the model isn’t generating enough sales activity for Ford to clamber back from the lowest market share since the Ford Pinto galloped onto the US sales chart.

To that end, Billy’s Boys have green-lighted three new 40mpg-plus B-segment vehicles based on the Mazda3 platform, two of which could arrive for the ’09 model year. There’s also a new small minivan slated for ’10 and the Fairlane box car.  In the medium term, Ford’s immediate future may well rest on the Edge/Lincoln MKX Crossover. The American automaker has set a sales target of 120k unit per year for the 265hp, all wheel-drive whip. If dealers fall short, Ford’s only bold move may be towards Chapter 11.

No wonder the Blue Oval is thinking the unthinkable. After spending some $10b trying to make Jaguar their upmarket brand (forgetting Lincoln), the British marque is now, finally, reportedly, up for sale. Industry wags also suggest that Volvo and Land Rover may be on the auction block. There’s also talk of Ford taking up GM’s offer to join the Nissan – Renault alliance– or marrying its fortunes VW, BMW, Honda, Toyota or Hyundai. And just in case you thought these options are the result of ill-informed conjecture, Bill Ford Jr. just hired former Goldman Sachs and Bank of America investment banker Kenneth Leet as his big picture guru.

Provided Ford has enough cash to see it through these dark days, Moray Callum is the more important man in this drama. Ford’s new Director of North American car design– the man credited for the RX8, Mazda3, Mazda6, Cx-7 and CX-8– has received carte blanche to create vehicles that inspire the American public to return to the Ford fold. The company has access to sixty-five thousand automotive R&D workers in Michigan alone and a $7.5b R&D budget. Like everyone else in the Ford Empire, Callum knows that his employer has to create at least one major hit, and soon. As always, a carmaker’s future ultimately depends on its ability to make the right cars at the right time.

You’ll never see one on the cover of a buff book or tuner title. They’re never the subject of motorsports art.  Chip Foose's Overhaulin' crew wouldn’t touch one with a ten foot spanner. But for every pristine vintage roadster, numbers matching cruise night star and drag strip trailer queen, there are millions of "beaters” out there, saving wear and tear on a car owner's pride and joy or just racking-up the miles.  A non-descript econo-box, compact hatchback, sedan, four-cylinder pickup or mini-van, the beater is motoring’s unsung hero.

The classic beater is an integral part of mainstream family life.  I have fond memories of our family's 1960 Buick LeSabre, christened the "Blue Witch.”  On long weekend road trips, confined to the back seat, our youthful imaginations stretched to relieve the monotony of long Sunday drives.  If we grew tired and napped, we awoke with nubby damask patterns etched on our cheeks.  By the same token, I remember the grey seats of a friend's parent's Renault that ferried us to and from swimming lessons while we sang Partridge Family songs (mea culpa), marking the vinyl with our wet bathing suits.  A green Plymouth sedan– boring as Danny Partridge’s do– eventually became The Millennium Falcon to my pre-teen cohorts. 

And who can forget their very first set of wheels?  For most of us it wasn't a fancy performance machine, a new car or even a nice car.  It was whatever we could get our hands on– after we’d begged, borrowed and yes, worked for the cash.  Mine was a Nissan Micra.  I quickly became adept at beater basics: the 'running-push-and-leap-in’ start, bending clothes hangers to temporarily hold up the exhaust and 1001 uses of duct tape. Don’t knock it: the beater gave us glorious mobility.

Writing this, I cast occasional glances out the window where falling petals from a neighboring crab apple tree are busy blanketing my 1997 Dakota pickup truck.  A picturesque scene perhaps, but it only serves to emphasize how long it’s been since the Dodge truck last moved.  A wheel bearing that needs replacing accounts for its current state of immobility.  It isn't a huge or costly job, just another addition to a lengthy list of future household expenses which must, alas, await additional income. 

I'd rather not add up what I’ve spent on this vehicle over the past six or seven years.  One (not me) could probably think of it in terms of groups of matching appliances, exotic Caribbean trips, home renovation projects or a normal, sane person's retirement savings plan.  Somewhere in the last couple of years, I crossed that invisible line between conscientious vehicle maintenance and obsessive compulsive custom hobby. This leap, of course, necessitated buying something that I could actually drive, you know, when I need to. A beater.

That’s why I purchased a Mazda 323 for less than the price of the tires that encircle my pampered pickup's custom rims. The Japanese sedan isn't much to look at (a statement that could also have been made fourteen years ago when it was new).  But $20 in regular fuel keeps it running between two paychecks.  It doesn't sulk if I forget the date of its last oil change. It slugs through the worst that winter can dish out and starts unfailingly during cold snaps. Snow hasn't stopped it yet, although deep ruts slow it down. It chugs along determinedly, with little-engine-that-could stoicism. Stalling and unexpected drifting displays are not part of its repertoire; unlike, I might add, its prima donna pickup counterpart.

The onboard Hanes manual has proved useful as an impromptu cushion when the sagging driver's seat suspension becomes a little too relaxed for sustained driving.  As familiar as an old glove, the beater’s interior offers no-frills comfort.  When I discover my nephew's cuisine– half a cream cheese bagel stuck to the seat back– I snicker, instead of a gasp in horror and rush to the car spa.  The nondescript carpeting bears witness to countless Tim Horton's spilled on shared road trips.  With the hatch flipped up and the seats flopped down, the beater’s cargo hold has played host to dogs and horseback gear, bags of grain, a set of spare tires, assorted building materials and a mountain bike.

My beater may not be pretty, but every scuff, scrape, dent and spill tells a story.  That should be enough reason to remember those oil changes.  But no, we tend take our beaters for granted– until that sad day when they simply aren't up to their humble, but essential task. Then, we have a decision to make. Unfortunately, despite years of faithful service and unfailing reliability, the scrap yard is usually the final destination. Perhaps one day Barrett-Jackson will tout compacts and K-cars as the new cool and beaters will earn their just reward.

Whatever else you can say about the Chevrolet Corvette, it isn’t a halo vehicle. Yes, it beats the Hell out of anything in its class and out bang-for-the-buck’s the big boys. But there’s not a single enthusiast driving around in an Impala SS thinking, "Oh yeah — I got the same AC vents as a 'Vette." In terms of appearance, the Avalanche resembles the Corvette about as much as Paul Giamati looks like Keira Knightley.  Contrast this with the Porsche Carrera GT. Despite the astronomical price gap between the GT and an entry level Boxster, the family face is intact and the underlying product philosophy is identical: speed, handling, fun.  That’s why it’s time for GM to use “America’s Sports Car” as the basis of an entirely new division– with Nissan.

Here's my pitch: merge The Jackal’s finest whips with Rabid Rick’s meanest metal.  Pull every Nissan and GM two door with a powerful front-mounted engine driving the rear wheels into a new Nissan/GM performance division. Sitting atop the heap: the 7.0-liter Z06.  Even without considering the stroked, supercharged 650+ HP "Blue Devil," the Corvette has finally surmounted its “also ran” status to achieve respect and admiration (unlike, say, the Aveo).  If ever a car deserved its own brand, if ever a model possessed the gravitas needed to carry a new company on its broad shoulders, it’s the Corvette. 

Half a rung below the mighty Vette: Nissan’s GT-R (nee Skyline).  The upcoming Japanese supercar may lack the Vette’s historical importance, but its gonzo performance rep would give the new division added glory.  And it would provide an answer to Porsche's exhaust-fed, AWD Turbo. A low-weight two-seater with 450hp driving all the wheels and a Nürburgring-fettled chassis equals major craziness. In fact, the GT-R might deliver enough performance to rival the Z06. Hang on; two cut-price uber-cars on the same team competing in the same niche?  Damn straight.

This is where the new division would have to be smart. They mustn’t neuter their model lineup to fit some rigid stepped marketing strategy, Zuffenhausen-style (i.e. the most powerful Cayman has less power than a stripped 911). Let all the division’s cars be their own mighty selves. With both the Z06 and the GT-R in the same showroom, GM/Nissan would offer performance-minded consumers a one-two punch that few contemporary carmakers could counter. The rest of the sports car ratpack would have to take the threat seriously.

Of course, the tricky part is deciding what to sell further down the food chain. The Chevrolet Camaro and the Nissan Z are natural enemies– unless the Z is re-fashioned to resemble a baby GT-R. Nissan’s versatile FM platform is already set up to handle four wheels a 'turning (think G35x and FX).  Re-engineering the Z to put power at all four corners wouldn’t require a major investment.  A $30k AWD Z could do some damage to entry-level Boxster and Z4 sales. But wait!  There’s more!  The new division could bring out a twin-turbo Z, cranking out 350 to 380hp, stoking fond memories of Nissan’s early 90’s whip.  It could be the ultimate budget supercar– or at least throw down the G-force gauntlet to the nutso Mitsubishi EVO and Subaru WRX STi.  

The Camaro is less complicated proposition. GM/Nissan’s boffins could wedge an unadulterated, unmolested and unrestricted LS2 engine into a stretched FM chassis (M45 showing the way) and stick with the prototype's show car good looks. A 505hp LS7 powered line-topping Camaro would follow quite nicely, thanks. A $40 -$45k bitchin' Camaro ain't gonna cannibalize Corvette or GT-R sales any more than Boxsters and Caymans eat 911 orders. Furthermore, while no Shelby GT500 customers would seriously consider a Z06, they’d be all over a Camaro with a Z06 engine.  

To round out the new Corvette Division, GM/Nissan would of course need a variant of the "Hey, that looks like fun" Solstice GXP, both in hardtop and convertible form. If they added the normally aspired Solstice into the mix, the performance brand’s lineup would run the gamut from $20k entry level cars to world-beating supercars. Two of them.  Hell, the new division could go for broke (hopefully not literally) and bring back the mid-engined Fiero to take on the Lotus Elise.

For the next 90 days, Rabid Rick and The Jackal are obliged to explore possible “synergies” between the two car making, continent-straddling giants. Instead of nudge-nudge wink-winking about “unused plant capacity” and pretending that the UAW doesn’t exist, these two [non-Nissan] titans should stop playing kiss – chase, combine forces and create something world class.  Separately, GM and Nissan both make great sports cars. Working together, they could make the best.  Forget all that talk about corporate synergy. What these companies need is sinergy.  A brand new Corvette Division would provide the sex-on-wheels halo both companies need.

Years ago, I found myself killing time in a London wine bar.  An English gentleman and I were busy amusing ourselves with fine wine and, um, English food when a pair of extremely attractive unattached ladies strolled into the bar. Uninhibited by the best Bordeaux, we enticed these French beauties to join us at the bar.  The women eventually escaped our charms to establish base camp at their own table.  I continued to stare longingly at our lost companions– until one of them stretched her arms above her head to reveal unshaven underarms.  The Nissan Versa was like that.  

Why in the world would General Motors want to hitch their wagon to Renault – Nissan?  Synergy?  Don't make me laugh.  I reckon the answer is simple: GM's Board of Bystanders and CEO Rabid Rick Wagoner aren't interested in hooking-up with Carlos "The Jackal" Ghosn's mob.  They gotta pretend to be interested on account a due diligence.  Lest we forget, Kirk "The Quiet Lion" Kerkorian launched this whole cockamamie scheme to inflate GM's stock price so he could recoup his $1b loss.  Done.  But now Nissan says it ain't giving GM a dime, no matter what.  Which takes the deal from dumb to dumberer ('cause the one thing GM could use from the Franco-Japanese conglomerate is cash money.)  OK, great.  But here's my question: why did Nissan – Renault play along with Kirk in the first place?  Do we really believe Carlos' claim that he wants to bulk-up against Toyota?  Did Kirk promise him a shot at running the world's largest potential bankruptcy?  I'd appreciate a little help parsing this bastard.  Your thoughts? 

After carefully considering the potential benefits of a GM – Nissan – Renault alliance, auto industry analysts have concluded that the deal makes about as much sense as Finnegan’s Wake.  Well duh.  Anyone even vaguely familiar with GM’s current crisis knows there’s only one thing the General needs right now: vehicles that people want to buy, at a price that makes the company a profit.  This they don’t have.  And guess what?  Nissan – Renault can't give it to them.  Even if Nissan and GM and Renault could work together (a completely preposterous concept), you’d see a second gen Chevrolet Camaro long before you’d see a hit product.  No, there’s something else in play here…

To understand why this weird-ass multinational deal has progressed to the point where GM CEO Rabid Rick Wagoner and Nissan – Renault boss Carlos “The Jackal” Ghosn are headed for a Bastille Day chin wag, it's important not to "over think" it.  The main players' motivations run the gamut from self-preservation all the way to greed, and back.  To wit: the whole thing was started by a man who's lost a billion dollars on GM's shares.  I don't know about you, but if I'd dropped a bil on a bunch of losers who refuse to institute radical change or even set targets towards profitability, I'd want to A) protect my investment from Chapter 11 and B) kick some ass. 

From that perspective, convincing Nissan – Renault to buy up 20% of GM’s stock makes perfect sense. TTAC’s sources reveal that GM’s cash position is slipping well below $10b every month– perilously close to the $5b pad it needs to stay in business.  Inventories are still up, and sales are still down.  Kerkorian’s game of footsie with the foreigners would add $3b to GM’s kitty.  That could be enough money to keep GM afloat until the end of the year, when cash from the sale of its GMAC finance unit finally arrives. At that point, GM would enter another one of those endlessly reoccurring “false dawns.”  Kirkorian could sell off his stock at a profit and die in peace. 

Analysts don’t see cash as a factor.  They believe Kirk’s play was designed to replace Rabid Rick with the Jackal.  It's an equally plausible scenario.  Despite the fact that Rabid Rick's administration has been an unmitigated disaster, GM's CEO has displayed a unique talent for self-preservation.  His message– slim the structure, stay the course– appeals to all of those GM's constituencies who have a vested interest in maintaining the status quo.  Which is, of course, everyone other than Kirk Kerkorian.

To remove Wagoner, Kirk had to offer The Powers That Be a suitable alternative.  You want a turnaround?  Let's hire the only man on planet Earth who's already done the deed.  The stock market responded to the possibility of Monsieur Cost Cutter taking the reins at GM with predictable enthusiasm.  GM's Board of Bystanders reacted with equal predictability.  After a due diligence conference call with Nissan – Renault execs, GM’s conclave of corporate co-conspirators charged Rick Wagoner with the task of further exploring a GM – Nissan – Renault alliance.  The appointment assured a less than positive recommendation on the plan and a competitive entry in The Most Bizarre Business Meeting of the Year award.  

GM’s Board quite rightly perceived Nissan – Renault as rapacious raiders, and sent their main man to defend GM against the barbarians at the gate.  Never mind cover talk about corporate synergy.  Nissan – Renault doesn't need GM's production facilities, technology, parts, platforms, dealers or office space.  This is all about Carlos Ghosn desire to add another pelt to his collection.  Wagoner's mob knows it, and they don't like it one bit.  When Rabid Rick meets the The Jackal, one can imagine that it will be a pissing match the likes of which this industry hasn't seen since its earliest days.  And then everyone will get back to work, as Kerkorian tries to find another stick that he can use to beat-up GM.

Only this deal has already inflicted tremendous damage on GM.  TTAC's Deep Throat told me he took his car in for repairs over the weekend.  The guy behind the counter asked if he'd heard that Nissan and Renault were buying GM.  Remember when President Bush announced he wouldn't be bailing-out GM?  Same thing: a clear message to America that The General is on the skids.  Whether or not the Jackal replaces Rabid Rick, the mere possibility of a deal with Johnny Foreigner shakes already rocky public confidence in the world's largest automaker.  The tipping point– where lowered sales makes people less likely to buy a GM product– just got closer.  Like it or not, when next quarter's disastrous results are revealed, The Quiet Lion will be heard.

Sometimes the photos don’t do a car justice. This is one of those times: the 2007 Chrysler Sebring is even uglier in the metal than it is in the photos. Hunting for a parking space last week, I had the bad luck to come upon a parked black 2007 Sebring in full production trim. Chrysler’s PR flacks gush that the new sedan is a “strikingly beautiful design” that’s “poised to inspire.”  They got the second part right. Chrysler fans are warned to look away as I share the fruits of my inspiration.

With the new Sebring, Chrysler’s designers have taken the art deco design cues that have made the Crossfire sports car such a rousing success (most depart dealer lots within a year of arriving) and transferred them onto the most cursed proportions in recent memory.  A rotund proboscis attached to a huge front overhang leads into a sweeping arched roofline that terminates in an abbreviated rear deck.  The Saturn ION employs similar proportions, as will the 2007 Nissan Sentra.  But Chrysler’s rendition is the worst of a bad bunch. 

Compare the Sebring to the 2003 Airflite concept that supposedly inspired it.  You know those made-for-TV movies that were supposedly “inspired by a true story?”  It’s the same deal: shared details, totally different result.  On the Airflite, the car’s nose is more chiseled and much less bulbous, the front wheel opening doesn’t crowd the front door opening and the roofline has more sweep and less arch.  The Airflite is strikingly beautiful.  The Sebring is an Airflite that’s totally let itself go.

Returning to the nose; round contours and huge, droopy headlights suggest a theme originally intended for a minivan, but later stretched for sedan duty.  As on the Crossfire, Chrysler’s stamped a half dozen grooves into the hood.  Perhaps they’re there for the dozen or so people who have lusted after a Crossfire, but did not buy one because they needed a back seat for the kiddies.

The doors are the best part of the design— by default.  As on the Pacifica, a deep undercut character line breaks up tall body sides. On the Crossfire, a character line that begins similarly performs a complicated transition from a concave to a convex surface. No awe-inspiring gymnastics here; just reasonably clean body sides whose sheerness conflicts with the blobby front fenders and amorphous rear lamps.

Sometimes when a car is designed, the designers and the engineers work at cross-purposes.  Bad proportions are one clue.  The window outline is another.  When the engineers fail to deliver the window outline the designers desire, the designers often “cheat”; they’ll tack on a black bit of trim to make it appear that the windows extend further than they do. It’s a nasty little trick that never works well: the automotive equivalent of heavy eye makeup. Then again, I once told a [long gone] girlfriend she might look better without so much eye makeup. When she stopped putting it on I realized why she'd been using so much. It’s like that with the new Sebring.

On a black car, like the one I saw, the black trim triangle disappears into the body. And, what do you know, my eyes wanted it back. Man, that’s one fat, ugly C-pillar.  Even if the window opening were as large as the designers wanted, the result still wouldn’t have looked good. The Sebring is only a couple inches taller than the Airflite, but those two inches, when combined with a seven-inch wheelbase reduction and a more conventionally-raked windshield, are passion killers. Like a pilot attempting an emergency landing on a short, alpine airstrip, the sweeping roofline must come down too far, too fast.  Seems the designers had given up on a graceful landing. They just wanted to land.

The Sebring’s designers apparently ran out of any ideas, good or otherwise, once they reached the Sebring’s literal end. The sedan’s large tail lamps could be from any one of the innocuously styled, utterly forgettable sedans of the late aero period. Their shapelessness bears some kinship to the droopy headlights, but none to the rear quarters in which they are embedded.

Overall, the Sebring appears to be the outcome of a “just get it done” mentality. It isn’t hard to guess the source of such a mentality: DaimlerChrysler ended its decades-old partnership with Mitsubishi, the provider of the new Sebring’s platform, during the sedan’s development. Designers and engineers often have trouble negotiating the compromises demanded by art, science, budgets and regulations.

Spreading the effort across two companies that were increasingly at odds must have exponentially compounded this difficulty. It’s a shame the divorce didn’t come sooner. Because it did not, we have the 2007 Sebring, a car so hard on the eyes it might single-handedly destroy Chrysler’s lingering reputation as a design leader.

[Michael Karesh operates www.truedelta.com, a vehicle reliability and price comparison website.] 

As I’ve aged, I’ve begun to notice that certain carmakers are determined to enrich chiropractors and practitioners of restorative dentistry.  When driving my Nissan 350Z, I found myself avoiding pockmarked roads for fear of ceiling-related spinal compression.  Even on smooth roads, I couldn’t quaff carbonated beverages.  Since then, I’ve created a checklist of cars my increasingly fragile skeletal system cannot abide. This includes the aforementioned Z, the Acura TL, pretty much any Infiniti or Porsche product, the S4 and S6 Audis and the Lexus SC430.  There is a special sub-category— torture– reserved for the vehicles made by BMW equipped with run-flat tires.

I understand the concept behind run-flat tires. Changing a flat on the side of the highway is only slightly less dangerous than marshalling at an Estonian track day.  Since most people pull over at the first whup-whup, run-flat tires could be a life saver.  Drivers can reach service without the need to sit on the side of the road and pray that drunk, fatigued and inattentive drivers have already found a safe place to crash.  And then there’s the complexity and the mess.  I personally have no problem jacking my own car (it’s getting the jack re-stowed that puzzles me), but there’s no way to change a tire without ending up with the tire stats imprinted on your clothing.

Run-flat tires are fine in theory.  In practice, at least as applied by the Bavarians, it destroys all hope of a luxurious ride. I’ve sampled the BMW 645, 545, 650 IC and 330 with run-flat tires.  Every single one was harsh riding: introducing an unacceptable amount of impact-related violence to otherwise stable suspension and solid chassis.  And that’s without discussing the stiff sidewalls’ numbing effect on BMW’s formerly sublime steering, on top of the automotive Novocain BMW calls Active Steering.  In any case, compound run-flat fatigue with nineteen inch wheels (sport package) and there you have it: the ultimate punishing machine.  

German car lovers often shake their heads knowingly and point out that Bimmer’s backyard is also the original home of the billiard table road.  I’ve been to Germany often.  And it’s true; find a twisting two-lane road in the Bavarian countryside and you’ll be traversing a surface as smooth as a supermodel’s epidermis.  But it’s also true that the roads in and around Munich, and throughout the formerly communist eastern part of the country, are marred by potholes and bumps.  No; I think it’s down to age-related snobbery.

Perhaps BMW believes that once a potential customer turns 50, the tipping point where enthusiasts are suddenly willing to trade razor-sharp handling for long-distance commuter comfort, they should be earning enough money to afford their more expensive models.  This would explain why Bimmer’s most costly cars– the 750, M5 and M6– don’t sport run-flats.  Of course, that theory wouldn’t explain the fact that the 7-Series was the first BMW model to include the pre-Boomer’s worst nightmare: the iDrive mouse-driven multi-infuriating controller.  But it’s possible that BMW’s left hand doesn’t know what the right hand is doing— which is about as good a description of iDrive as I can provide. 

This run-flat torment is not the roundel’s exclusive domain, but they have certainly perfected the torture.  RF tells me that tire technology is evolving; that the 325i is not so bad, and that the comfort – handling nexus will eventually be sorted.  For the time being, nothing beats installing a couple of pairs of proper summer and winter shoes.  But I’m not happy buying a brand new car only to throw out (or wait out) the OEM tires for something that should have been installed from the git-go.

Meanwhile, I’m struggling to understand why we need wheels larger than 17” for street use.  As I drive down the highway next to a youngish person driving a Chrysler 300 with double dubs, I notice how the driver looks bobble headed as their car impacts abruptly over the slightest road imperfections. What is the point of this?  At the risk of pissing off at least three separate demographic groups, I blame women for both trends.

My wife loves the idea of run-flat tires.  In fact, she thinks all tires are run-flat capable (which explains why every flat tire in my house is accompanied by the need for both a new tire and a new wheel).  In addition, my wife doesn’t complain about the deterioration in ride quality from run-flat tires.  I suspect her tolerance for auto-related physical abuse is related to her reasoning for wearing shoes (especially high heels) that “look fantastic” but eventually, inevitably, hurt like Hell.  So let’s make those twenty two inch run-flat tires standard equipment on all the chick cars and let me have my seventeens and some Michelin Pilots and call it a day.

Relax.  The news that GM stockholder Kirk Kerkorian has been playing footsie with Renault/Nissan doesn’t represent some kind of paradigm shift for GM or global capitalism.  When assessing Kirk’s secret plan— selling a minority share in GM to the Franco-Japanese automotive alliance— remember whose interests The Quiet Lion serves: his own.  This is not about GM.  It’s about Captain Kirk’s spectacularly bad investment in the world’s largest automaker.  But don’t take my word for it.  "Sometimes the news in itself is already the purpose," DaimlerChrysler's CEO announced upon hearing the news.  In other words, multinational automotive conglomerator Dieter Zetsche thinks Kerkorian is just talking up GM’s stock price.

Lest we forget, the octogenarian investor has lost about a billion dollars since he started buying up GM stock.  (I don’t care how many billions you’ve got stashed in Swiss bank accounts and offshore trusts, one less thousand million has GOT to hurt.)  Anyway, mission accomplished.  Despite the fact that GM-friendly Wall Street analysts have just celebrated GM getting smaller, the investment community is, let’s face it, a size queen.  The news that Captain Kirk has been busy whoring GM to dubious foreigner carmakers— I mean discussing the possibility of GM entering into a mutually beneficial strategic alliance– sent GM’s stock price soaring.  On Friday (always a good day to hit the market with a surprise), GM shares closed at $29.79 up $2.35.  

On the other hand, if Wall Street catches wind that Kerkorian is unloading a chunk of his 9.9% GM shareholding, the company’s stock price will swan dive.  So it’s not entirely impossible that Kirk’s play is what it seems: an attempt to save GM’s bacon.  And yet, on the face of it, a GM – Renault/Nissan hook-up makes no sense.  Even The Detroit News’ resident optimist sees no benefits to the deal.  “GM has spent the past 15 years pushing to achieve what the megadeal would purport to achieve," Daniel Howes wrote yesterday. "Economies of scale in purchasing, common manufacturing and product development processes, global leadership in developing world markets.  These megadeals seldom — if ever — deliver the ‘synergies’ their highly paid outside architects say they will.”  

Of course, there is one important benefit to Captain Kirk’s bold moves: cash.  If you take a close look at what’s been proposed, Kirk wants Nissan/Renault to partner up, then “seal the alliance” by buying 20% of GM’s common stock for $3b.  Three billion dollars doesn’t seem like a lot of money in the GM scheme of things.  It’s almost a billion less than GM CEO Rabid Rick Wagoner recently spent paying 37k union workers not to work.  But it’s not chump change either— especially when you consider the fact that GM is running on fumes.  Remember the extension of GM’s accounts payable and the new secured line of credit?  Cerberus does.  

The [fire] sale of The General’s GMAC finance unit to Cerberus Capital Management is the last bit of family silver The General has left to flog.  And it’s only two credit downgrades away from implosion.  Without GMAC cash, the show’s over.  In fact, it may already be too late.  GM’s vehicle sales are in the doldrums, there’s no Hail Mary in the pipeline, market share (dealer income) has gone south and a bunch of humongous downsizing bills are coming due.  Not to mention the possibility of an August strike at GM’s mission critical ex-subsidiary, bankrupt parts supplier Delphi (yes that).  Avoiding Delphi's cyanide pill may require another billion or so from GM’s threadbare corporate pockets.    

If you doubt that GM could be so cash-starved that The Quiet Lion would be allowed to sell the company’s soul to Renault/Nissan, consider this.  TTAC commentator Finance Guy recently alerted us that GM is offering its zero percent new car financing deal to anyone with a pulse.  More specifically, FG has resurrected 10 dead deals.  No wonder: GMAC will now buy down on credit tiers A to E (prime to non-prime buyers).  Cutoff is around a 590 FICO.  Typically people in that range can’t get a new car without a substantial down payment.  Obviously, GM is opening the floodgates.  There’s one word for that: Mitsubishi.  The Japanese carmaker’s US fortunes foundered on the rocks of easy credit, as hundreds of thousands of come-on-down loans blew up in their face. 

In short, the idea that GM would contemplate joining a Renault/Nissan “alliance” is a sign of the General’s desperation, not its ability to seize an international opportunity (whither Fuji, Fiat and Suzuki).  Viewed from another angle, depending on what the Franco-Japanese contingent want for their money, you might even say that GM’s breakup has already begun.  In any case, it’s yet another one of the bizarre episodes we’ve been predicting for some time: the end of days at GM.   

I’ve seen the car of the future.  It's not a diesel.  It’s not a hybrid.  It doesn’t run on electricity or natural gas or elastometric energy storage units recharged by rodents operating exercise wheels, supervised by domesticated felines. The future is sitting in a corner of your local Ford dealer's showroom gathering dust: a Ford Focus with the optional 2.0 E engine. This little runner is what’s called a PZEV (Practically Zero Emissions Vehicle).  That's a cut better than a ULEV (Ultra Low Emissions Vehicle) but not quite as good as a ZEV (Zero Emissions Vehicle).  Ah, but the Focus E is still the best a tree hugger can get.

If you think about it (a rare activity for people who focus more on politics than scientific facts), a Focus PZEV has less environmental impact than an electric-powered ZEV.  The ZEV rating measures only tailpipe emissions– not a vehicle’s the total impact on the environment.  Consider the infrastructure that supplies the energy for the electric car. Plug in an EV-1 every night, and someone throws on more coal at the powerplant.  In many cities, a PZEV car like the Focus E emits exhaust that is cleaner than the air it consumes.  In fact, creating instruments to measure the miniscule amounts of pollution from a PZEV car is a growth industry, and a real technological challenge.

Ford's joined in this technological accomplishment by BMW (325ci), Honda (Civic GX), Hyundai (Elantra), KIA (Spectra), Mazda (Mazda3 2.0), Mercedes (E350), Mitsubishi (Galant), Nissan (Sentra), Subaru (Legacy 2.5), Toyota (Camry), Volkswagen (Golf) and Volvo (V70); to name but a few makes and models. 

[GM is notably absent from the list of automakers building PZEV vehicles.  For 20 years, GM offered the most fuel-efficient cars in America. Starting with the Vega through to the three cylinder GEOs of the ‘80’s and ‘90’s and the EV-1 electric car, GM spent a great deal of money to top the EPA's mileage list.  All these cars had one thing in common: no one bought them.  Eventually GM gave up this unprofitable pursuit.  While GM cars usually have the highest mileage in their respective categories, The General only makes a token effort (e.g. the Saturn VUE hybrid) to compete with high-mileage “loss leaders” like the Civic or Prius.] 

Of course, the gasoline-powered, internal combustion engine hasn’t finished cleaning up its act.  Every year, the old dear gets a little better.  Evolving technology– direct injection, semi-stratified charge combustion, higher operating temperatures, more reductions in internal friction, etc. — promises even cleaner and more fuel efficient cars in the future.  None of this is "news" in the media's view.  A cumulative 2% improvement in efficiency year on year doesn't make nearly as good a story as fuel cells, hybrids or diesels.  But spread this incremental improvement over 20 years and tens of millions of vehicle and the cumulative effect– in terms of the engines' overall environmental impact– is astounding.

There is a single but significant fly in the near-organic ointment: Americans don't buy fuel-efficient cars.  No matter how much the general public complains about the price of gas or the planet’s ascending temperature, the cleanest and most fuel efficient cars are often the most unloved.  The media never misses an opportunity to chronicle the "skyrocketing" sales of hybrids, but fails to point out that they're a relatively obscure breed.  Last year, total hybrid sales captured around 3% of the new car market.  Toyota sells more SUVs than that.  Since Toyota and others lose anywhere from $2k to $4k per car on their low-end hybrids, there is little incentive to drastically increase production and sales.  No wonder Bill Ford has pulled back from his public commitment to produce 250k hybrid-powered vehicles by the end of [this] decade.

So why do carmakers offer money-losing high mileage cars?  They have no choice.  As we’ve discussed here before, every car manufacturer has to meet a CAFÉ (Corporate Average Fuel Economy) number.  If Ford wants to sell Lincoln Navigators at a $10,000 markup without incurring a substantial EPA fine and/or negative PR fallout, they need a produce a passel of PZEV Foci to boost their fleet average– whether they sell or not.  Every carmaker suffers this problem.  Toyota chooses to lose their money on hybrids, and reap some positive PR. BMW pays the fines.  Ford, GM, Chrysler and others suffer in silence.

Few things are certain. But the most likely scenario for the car of the future is that it will be a lot like today's Ford Focus (minus the strange taillights, we hope).  It’ll be relatively small and simple, with an extremely sophisticated internal combustion engine. And, no doubt, gathering dust in the corner of the showroom, while buyers flock to the latest gas-guzzler, and pundits bemoan the state of the nation's oil consumption.

For a second consecutive year, GM’s Oshawa production facilities have received J.D. Power and Associates’ “Gold Plant Quality Award.”  The award is given to the production facility with the fewest number of defects per vehicle, as measured by J.D.’s famous “Initial Quality Study.”  Oshawa created cars with just 43 defects per 100 vehicles.  The industry average was 124.  So what do you do if you have the second most productive assembly plant on the continent?  If you’re GM, you do the only logical thing possible: you close it.  

There’s no question that GM has too much of everything: brands, models, dealers, workers, factories and suits.  Although the media hails GM CEO Rick Wagoner for cutting (a.k.a. buying off) production workers and eliminating plant capacity, they’re forgetting that the same stupidity that lead to the cuts could well mean stupid cuts.  As GM downsizes its vast empire to match its diminished role in the US automotive market, it runs the risk of making too many cuts in the wrong places.  Like Oshawa.

It may be a piercing glimpse into the obvious, but a plant that produces the fewest defects per vehicle is also building your highest quality cars.  GM needs higher quality products like a losing football team needs touchdowns.  The days when close enough was good enough are long gone.  If GM is going to claw their way back against the likes of Toyota, Honda and Nissan, they can only do it with virtually defect-free products.  They know this.  In fact, they already claim success; continually citing a supposed “perception gap” between old (i.e. crap) and new (i.e. high quality) GM vehicles. 

Again, it all seems pretty simple: produce better vehicles at your award-winning plants and reap the rewards, right? Well here's the thing.  The vehicles produced at GM’s Oshawa plants are some of GM’s best sellers.  Oshawa’s Number 2 Plant produces the Pontiac Grand Prix and Buick LaCrosse.  The LaCrosse is the best selling vehicle under the Buick marque, accounting for some 93k units in 2005. The Grand Prix has only just been eclipsed by the G6 at around 120k units.  But here’s the rub: GM (literally) has no business making “best-selling” products that drop as low 93,000 units.  Their huge dealer network and corporate infrastructure require gigantic hits, regardless of their quality.  And yet…

By killing Oshawa, GM is revealing two important defects in its “right sizing” game plan.  First, the General’s generals are demonstrating their lack of focus on product quality.  Why kill your best plant before your worst, even if that plant’s products aren’t best sellers?  If a hockey team doesn’t make the playoffs, you don’t trade your best player, you rebuild around him (unless you’re from Boston).  Oshawa builds some of the best-built products in GM’s lineup.  Throwing that skill overboard in favor of less capable factories is insane.  Which brings us to the second problem: flexibility.  

Honda’s American facilities can change the platform-sharing vehicles that a factory produces in a matter of hours, tailoring production to meet changing demand (e.g. Ridgeline pickup to Odyssey minivan).  The new, smaller GM will need to follow Japan’s lead, establishing factories that can create more than one product.  This trend increases the importance of any given factory’s workers and processes; product changeover is nowhere near as easy as building the same thing day in, day out.  Again, it makes sense to use your A-team, not the accidentally successful B, C and D teams.

A recent GM internal report supported the philosophy.  It recommended that GM invest $400m in Oshawa to transform and amalgamate the two plants into a single class-leading, platform-sharing production facility.  The plan: let the men and women of CAW local 222 produce the upcoming (and day late) rear-wheel drive, mid-size Zeta platform.  If implemented, the end result would be a Canadian produced Cadillac DTS, Buick Lucerne and GM’s latest halo, the Chevrolet Camaro.  When asked about this report to save the golden egg laying goose, GM Car Czar Bob Lutz scoffed and dismissed its conclusions as “merely speculative’.  Speculative because transferring production northwards would require closing the DTS’ and Lucerne’s current Detroit/Hamtramck home.  In the UAW-appeasing, YIMBY (Yes In My Back Yard) world of GM, that ain’t gonna happen.

It’s not right.  GM should use its Oshawa facilities to their utmost capabilities.  The factory has proven that they can produce over 500,000 vehicles annually that rank among the best for fit and finish.  The Detroit/Hamtramck plant only cranks out 170,000 vehicles with the same number of employees.  GM should consider Darwin’s theory and let the back of the herd die.  Right size the right plants, kill the stragglers that keep dragging the brands down and invest in what will ultimately make you a better carmaker.  After all, it’s one thing to talk about quality.  It’s another to actually build it.

Ford and GM are launching summer sales.  The development reveals an open secret: the automakers are selling vehicles at a loss.  There are plenty of reasons for this.  The need to maintain cash flow, pay the Union, generate business for their finance arms and protect market share.  But this trend can’t continue indefinitely.  At some point, both of these companies need to produce profitable vehicles, and lots of ‘em.  But what kind?

Back in the “good old days”, Detroit made its profits with middle and high end cars and pickup trucks.  The Big Three only built small cars when recession and imports forced their hand.  And no wonder: there wasn’t any “real money” in small cars– at least not for Detroit.  Their bureaucratic manufacturing infrastructure and union obligations made it difficult to compete with smaller, leaner competitors.  Besides, it wasn’t much more expensive to design or build a big vehicle than a small one, and they always sold for more money.  

Eventually, American automakers surrendered the low-end domestic car market to the Japanese, Koreans and Germans.  As the years went by, the foreign competition gradually moved its products up-market.  Eventually, the Dai San launched luxury brands, created out of whole cloth (or leather).  These were worrisome developments, but dismissible.  Then, calamity: Detroit struck gold.

The SUV boom provided a serendipitous boost to the domestics’ bottom-line.  The ability to sell cheap-to-build vehicles at a premium price was worth billions (and funded a large number of dubious foreign acquisitions).  The SUV-fuelled “easy money” diverted The Big Three’s attention at the precise moment when non-Detroit brands were making serious inroads into the heart of the car market.  Now that the SUV market has cooled, the Big Two are left playing catch-up, looking for a new cash cow.  Unfortunately, the US car market has changed.

The middle market now belongs to the Japanese.  Before the SUV boom, the Ford Taurus was a major force.  Its two replacements, the Fusion and the Five Hundred, haven’t exactly set the class on fire.  Although the Mexican-built Fusion is a solid sales success, it’s smaller and cheaper than its predecessor; which doesn’t bode well for profitability.  The Five Hundred is big and plush and augurs more profit potential.  But sales have been weak.  GM wishes it had cars as distinctive (if underdone) as these.  Meanwhile, Toyota, Nissan and Honda are banking huge profits on highly-evolved– and continually evolving– mid-market motors.    

The size class above the middle has lost much of its volume and premium models to the SUV boom.  The “near luxury” class is also packed with killer competition.  BMW, Mercedes, Lexus and Audi have all reached down– joining Infiniti and Acura on their way up.  This combination of superb products, badge snobbery and customer service has marginalized Cadillac and especially Lincoln.  It’s worse yet for Buick.  And Pontiac.  And Mercury.  And Saab.  It’s hard to see what Ford or GM could do in the “near luxury” market to end well-earned “foreign” hegemony.  Even when The Big Two own a successful niche player (Volvo), fierce competition in the segment makes for slim margins.

And then there’s the crisis looming in the truck market.  Toyota and Nissan are bringing out new full-size trucks and ramping-up production capacity.  The same industry wags who said building small domestic cars was a waste of time now say US truck buyers are too brand loyal to defect to the new guys.  GM and Ford better hope so; neither company is in any condition to engage in an extended price war, and the loss of profits would be catastrophic to the rest of their holdings.

So where are the new “profit centers?”  Only two American cars are enjoying strong, profitable sales success: the Ford Mustang and the Chrysler 300 (and its Dodge cousins).  GM is planning a new Camaro to challenge the Mustang and maybe a rear-drive platform to challenge the 300.  But both the Mustang and the 300 have no direct competition at present, making the new models’ potential success hard to judge.  New, boldly-styled rear-wheel drive sedans may only fragment the existing market, rather than extend a profitable niche.

Which raises a scary question: even if Ford and GM come up with a hit vehicle or two, will they deliver life-sustaining profits?  A spot on the top ten list may guarantee profitability, but the ever-expanding number of product niches– and the number of automakers in each niche– makes it harder for any one product to achieve large (i.e. profitable) volumes.  The twin solutions: flexible manufacturing and foreign sales.  Neither of which are Ford and GM’s strong suit. In fact, GM and Ford’s best chance for profit now lies in creating a spread of must-have vehicles in smaller runs.  This strategy requires some serious money, which can only be generated by profits.  Uh-oh.

Last Wednesday, Mark Fields spoke at a Competitiveness Forum sponsored by the United States Chamber of Commerce.  Fields has an impressive title: “President, The Americas, Ford Motor Company.”  He also has an impressive international resume: Managing Director, Ford of Argentina; CEO of Mazda; Executive Vice President of Ford of Europe, and Chairman and Chief Executive of Ford’s Premier Automotive Group.  The auto exec’s speech touched all the usual bases: ethanol, currency manipulation, health care, tax credits, etc.  When Fields turned his attention to issues of national pride and policy, his remarks were measured and concise — and made about as much sense as a Ford GT entering the Baja 500.   

According to Mr. Fields, the auto industry is “iconic to America” and Ford is “an iconic American brand.”  Of course, by “America” Fields meant the United States; not Paraguay, Honduras, Guatemala or Mexico.  On the other hand, Fields admitted that FoMoCo “faces a tough 2006 in North America.”  So maybe “America” means the entire North American continent, including Mexico and Canada.  Or… not.  “The United States is the most open and competitive automotive market in the world.”  So he was talking about the US and not the rest of the Americas?  Or even the rest of North America?  

Maybe.  Field asserted that the Mexican-made Fusion triplets (Fusion, Milan, Zephyr) are “gaining share” and the “Fusion … is our way of saying … the Honda Accord and Toyota Camry’s reign at the top of the American sedan market are no longer unchallenged.”  So a Mexican-built car is Ford’s hedge in the American market against Japanese-branded cars built on US soil.  This is getting more and more confusing.  But wait – there’s more. 

Fields bragged that Ford’s new hybrids are “posting record sales of late” and their “innovations led to more than 130 patents,” with more pending.  The Ford exec conveniently omitted the fact that Ford’s hybrid technology depends on technology licensed from Toyota.  Nor did he mention the Japanese-made transaxles and battery packs and German-built regenerative braking systems which make Ford’s hybrids possible.

Halfway through his speech Fields finally explained what he meant by an “American” car.  Like the Ford-sponsored Level Field Institute pressure group, Fields’ definition of an American automotive product relied almost entirely on US employment statistics: the number of Americans employed in America by foreign-owned automakers vs. the domestic-owned carmakers’ American workforce.  Even though Daimler-Chrysler is German-owned, Fields grouped DCX’ workers with Ford and GM’s domestic workers.  Translation?  In Field’s world view, “American-made” refers to any car, truck, minivan or SUV built in an American plant that isn’t owned by a Japanese or Korean company. 

Fields then castigated his Japanese and Korean competitors because “most of their design and engineering jobs are not located in America.”  Maybe that’s because they’re GLOBAL corporations that decided to locate their design and engineering centers inside their target markets.  If you look at the top models Honda, Toyota, Nissan and Hyundai sell in America, the majority was conceived in design centers located on American soil, designed by American-born designers. 

Anyway, for industry watchers concerned with The Blue Oval’s impact on US industrial policy, Fields’ speech raised more questions than it answered.  Why, for example, did Ford’s president single-out Japanese and Korean manufacturers for criticism, instead of censuring all companies selling cars on American soil that aren’t built in the USA by an American-owned company?  Could it be because that definition would include Ford-owned “foreign” brands: Volvo, Aston Martin, Land Rover and Jaguar? 

If you think about it, the cars made by these companies are just as “foreign” as an imported Toyota.  So why did Fields denounce “foreign” automakers that come here from other countries and establish a brand identity and manufacturing presence in the US?  They’re only doing the same thing Ford did in Germany.  And England.  And Australia.  And Argentina.  And… and… and…

Not to put too fine a point on it, Fields’ hypocritical flag waving was stunning in its rational inconsistency.  Fields’ speech bitched about foreign governments helping their automakers with currency manipulation, and then bragged “states and local governments subsidize new investments, in some cases as much as $160,000 per job. Governors get re-elected winning new plants.”  How can Fields criticize Toyota for investing in American (US) production when (according to various press reports) Ford has just pulled the trigger on an estimated $9.2 billion to update and expand its Mexican operations — to replace lost production capacity from closing plants on US soil?

Despite his assertions to the contrary, Fields’ speech was nothing more than a thinly veiled plea for a bailout from the federal government via tax credits and for protection from the very same free trade market that companies like Ford helped build.  If that’s all Mr. Fields has to say, perhaps he’d be better off restricting his remarks to the viability of Ford’s products in the American marketplace.  Then again, maybe not.