Let’s get one thing straight: There are very few inanimate objects which inspire my personal appreciation, respect, and interest as much as the 2010 Toyota Prius does. It’s a happy faced, slick, aerodynamically-optimized, practical, comfortable and dead-reliable vehicle which exists for the sole purpose of letting concerned Americans feel like they are making a small but genuine difference in their efforts to reduce their consumption of the world’s finite resources.

I had to travel 1000 miles to buy my first car. At the time Toyota dealers in the Southeast didn’t have Camrys with optional ABS (1994). Why? Supposedly you didn’t need it. Unless you bought the top of the line model, which cost an extra $3000. Thanks to this pearl of wisdom from Toyota’s Southeast distributorship, I went to New Jersey where my brother and I bought respective Camrys. Should I have bothered? I’ll put it this way. Back in the Clinton era this regional cabal offered a really nice Scotchguard protection deal that had the word ‘Toyo’ in it along with windows etched with your VIN and about $7 worth of hocus pocus that no one really cared to have. The surcharge? $699. They all did it. After my third or fourth visit to the local new car rodeo, I said “screw ’em” and headed to [New] Jersey.

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Update: According to the speaker of the influential CDU Economics Council, there will be no decision about the future of Opel before the 27 September national elections. “Nothing will be decided before the elections, because nobody in the government wants to lose face because of this,” a council member said to Automobilwoche [sub]. The Opel Trustee figures that the latest date for a final, signed contract is mid September. If nothing is signed by then, the government money has run out and Opel is bankrupt.

The GM/Opel/Magna/Sberbank/GAZ group grope is in trouble. The writings are on all walls.

Opel is hemorrhaging more than €5 million per day, the Westdeutsche Allgemeine has learned. Opel spokesfolk said, it’s “only” €2.8 million. By mid September, the €1.5 billion bridge loan, underwritten by the German government, will be used up. There won’t be more money—that has been made as clear as can be. Time and money are running out. Why is Opel burning so much cash despite brisk sales? The Opel Tech Center has 7000 highly paid engineers. They work(ed) for all of GM. Bankrupt GM stopped all payments.

In the meantime, talks between GM and Magna hit one snag after another.
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Here’s the full text of the speech given by Akio Toyoda, the new president of Toyota Motor Corporation.

Thank you very much for coming today.

I was appointed president of Toyota Motor Corporation at the board of directors meeting held on June 23, following the Ordinary General Shareholders’ Meeting on the same day. In addition to my comments here today, our executive vice presidents will provide remarks on their areas of business.

The global automobile industry has been facing extreme hardships since the latter half of last year. As for Toyota, we ended the last fiscal year with an operating loss of 461 billion yen. We expect our losses to deepen this fiscal year, and so all of us in the new management team at Toyota feel like we are setting sail during a storm.

Since the birth of Toyota, the company’s philosophy has always been to “contribute to society.” The first article of the Toyoda Precepts, our original statement of purpose as a company in 1935, states that we must contribute to the development and welfare of each country we operate in by working together – regardless of individual position – in faithfully fulfilling our duties. In other words, we must manufacture high-quality vehicles for the benefit of society.

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Eddy gave us the heads-up on Chevrolet Volt Vehicle Chief Engineer Andrew Farah’s party piece over at FastLane. Straight out of the gate, Farah’s not shooting straight on the all-important question of the Volt’s effective driving range. “Scott” asks Andy to compare the Volt to the Honda Insight and Toyota Prius non-plug-in hybrids. “Clearly I enjoyed the significantly longer EV distance that is available with the Volt. I had to drive quite some distance before the engine came on, even though I didn’t start with a full charge. By comparison, our chassis is much more sporty than either of the other vehicles.” Non-starter and a non-sequitur in the same comment; nicely played. And just when you thought it was safe to sit and spin, another e-interlocutor gets Andy to spill the beans.

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Communist witch hunters called Americans who supported the battle against Francisco Franco before World War II “premature anti-fascists.” In other words, they were right for the wrong reasons. There’s a lot of that going around these days. For example, Chrysler and GM’s claim that they need to cull dealers is spot on. But trimming overheads, as the automakers claim, ain’t it. [See: number three after the jump.] By the same token, it’s also true that New GM is doomed to failure. But not for the seven reasons that Seeking Alpha sets forth. Still, Jason Mathew’s analysis is worth a closer look . . .

1.) $1400 in per vehicle costs went untouched to ensure re-election and voter satisfaction rather than shareholder value

Not exactly. GM’s “reinvention” is facilitating a rapid decrease in the number of GM employees (despite Senator Stabenow’s “jobs, jobs, jobs!” pro-bailout rallying cry). Many of these disappeared have agreed to buyouts that limit their pensions. In any case, as the employee count decreases, as the old guard shuffles off to the great assembly line in the sky, GM’s pension costs are going down. Pension costs for retirees come out of the pension, not GM’s bottom line. For whatever that’s worth.

2.) Bankruptcy court ruling did not establish labor rate parity with Toyota (TM) or Honda (HMC)

GM’s direct labor wages were already close to parity with the transplants. As TTAC’s Ken Elias taught us many, many moons ago, the domestic automakers set the bar for automotive assembly workers’ hourly pay. GM’s real excess labor costs: the Other Post-Employment Benefits (OPEB) paid out to GM’s massive retiree base (e.g. health care). The real labor problem: highly paid workers who don’t contribute bupkis to production (thank you UAW work rules).

3.) Reducing dealer count will have nominal impact on GM’s cost structure yet significant downside impact on market share

Dealer count, market share, dealer count. Chicken egg chicken. GM needed to cull dealers to eliminate overlap, lower inventory costs and kill brands (to focus branding, products, marketing, etc.). In theory, less inventory on the ground should reduce GM’s carrying costs, reduce bureaucracy (improve accountability) and speed-up cash flow/turnover.

Any way you look at it, there are too many GM dealers to support the bankrupt automaker’s diminished—and diminishing—market share. What’s not clear: whether GM can sell the same number of vehicles (at retail) with fewer dealers. Or, if you prefer, what is the right number of GM dealers? I’m not sure I’d want the same GM suits who were working the old dealer system without complaint to establish the new one. In fact, it’s a really bad idea.

4.) Government and UAW as majority owners = poor management

Ya think? But the United Auto Workers (UAW) likely won’t have, nor do they desire, a strong influence on GM’s management. For one thing, the UAW doesn’t want accountability. The more it interferes, the less it can bitch and moan and (when needed) duck and cover. They’ve done just fine without saying anything about GM’s current plans. Why start stopping now?

Besides, the UAW’s “independent” union health care VEBA owns GM stock, not the UAW itself. The UAW has publicly stated that it just wants to get full value for its stock and cash-out ASAP. Believe it or not, I believe them.

[Seeking Alpha’s scribe would have been better off just saying “Government = poor management” and be done with it.]

5.) GM will be at a strategic competitive disadvantage with no ability to financially engineer sales with 0% loans and extend consumers credit

Wrong. GM will not be at any disadvantage in this regard; GM pays GMAC for those financially engineered deals, and the government more or less owns both organizations. Bottom line: if GM wants to hold fire sales, toe tags sales, zero percent deals, cash back specials and get America rolling promotions, you, the taxpayer will pay for it.

6.) GM Europe operations will only get worse, supply base is weaker than the U.S. and surviving brand equity is weak

Huh? GM’s off-loading its European operations to someone at some point soon. Or not. Either way, the corporate mothership is busy washing its hands of the whole deal.

7.) 35-MPG energy requirements in 2016: GM currently has one vehicle that meets that standard today

First of all, loopholes. Lots and lots of loopholes. Secondly, do we seriously expect the Feds to put its $50 billion investment in GM and Chryco at risk by regulating GM (a.k.a. themselves) to death?

The real problem for New GM is the same one that led it to its first bankruptcy: it doesn’t know how to make the products that Americans want to buy at a sufficient profit to take in more money than it spends. In other words, it can’t compete. To think that a government-run GM can make that happen when a privately held GM could not is the worst sort of folly. The folly for which I have to pay.

While the faintest signs of economic turnaround have Detroit going back to optimistic prognosis mode, Toyota’s new boss isn’t ready to be caught guessing. Automotive News [sub] reports that Akio Toyoda is forecasting losses through March 2010, saying “we want to do everything possible to avoid a third consecutive year of losses.” Toyoda’s goal? Profitability using only 70 percent of his firm’s production capacity. Which means no plant shutdowns are planned. Keep breathing, San Antonio. Emphasizing the conservative approach is Toyota’s forecast of an $8.8 billion loss through March 2010. Analysts expect the loss to be closer to $5 billion, says AN. More autonomy for US operations and an emphasis on regionally marketed products are also major components of Toyoda’s revamp of the world’s largest automaker.

Forbes, number one on the top ten list of top ten list purveyors, has published their list of “Ten Cars That Changed the World.” It contains vehicles “that were the first of their kind and that influenced the design and performance elements of the entire industry” and that have “staying power.” Or so they say. While some are no-brainer picks as history-changers (Ford Model T and VW Beetle), some are kind of strange (c’mon . . . the AMC Eagle?). And I know a few million Corvette fans who will dispute their statement that the Porsche  911 “has the longest production run of any sports car sold in the U.S.” Forbes‘ complete list is after the jump. Alternative suggestions welcome.
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By all accounts, the refreshed Ford Taurus is an excellent car. Easy-to-drive, economical, well-built, comfortable, capacious and handsome. As a sign of its pre-launch success, the vehicle’s critics are focusing on its sticker price. As a firm believer that something is worth exactly what someone will pay for it, it remains to be seen if Ford’s priced the refreshed Taurus out of the market. Meanwhile and in any case, Taurus Gen 6 won’t “save” Ford like the 1986 model. The 2010 Taurus may be a singular automobile, but it is not a signature automobile. To survive in today’s crowded, shrunken, hyper-competitive new car market, Ford needs vehicles that clearly differentiate the brand from the competition; and marketing to match. Ford recognizes the problem but fails to rectify it.

“Drive the Ford Difference.” Well, exactly. But what is the Ford difference? Even as The Blue Oval Boyz spend millions promoting their latest brand slogan, they continue to struggle with its meaning. The tag line’s tortuous evolution indicates their inveterate indecision. Lest we forget, “Drive the Ford Difference” has just replaced “Drive One,” which replaced a farrago of consumer exhortations: “Drive Quality,” “Drive Safe,” “Drive Green,” “Drive Smart.” Ford’s gone from pick a slogan, to an anti-slogan, to guess the slogan. The Glass House Gang is in real danger of descending into inscrutable, Coke-like zen koans (i.e., Ford is).

This is Ford CEO Alan Mulally’s Achilles heel, and you can see the protruding arrow. In terms of manufacturing process, Big Al has cleaned house: eliminating much of the corporate behemoth’s sloth, waste, fraud, duplication, bureaucracy, indecision, intransigence, etc. The $25 million man (first year) has also been lucky enough to prove that it’s better to be lucky than smart. The company’s rep is riding high on its decision to shun the federal bailout buffet—ignoring the fact that it only did so to protect to Ford family control and recently tapped a $5.9 billion, no-interest, taxpayer-provided “retooling loan.” More to the point, Big Al has done nothing to save the Ford brand.

Automotive branding—deciding what vehicles to build, how to build them and how to sell them—requires what George Bush famously called “the vision thing.” Mulally’s administration suffers from a failure to synthesize. In other words, truck buyers know the F-150 is built Ford tough (complete with its own logo). But how do you link that selling point with the 2010 Ford Fusion Hybrid’s claim that it’s “the most fuel-efficient midsize sedan in America®”?

Or the Mustang head vs. heart, heart wins campaign? And how does that jive with the Dirty Jobs guy’s claim that the Fusion beats the Toyota Camry and Honda Accord for quality? Meanwhile, the poor (but excellent) Ford Explorer is reduced to promoting roll-over protection while the Edge urges you to “drive past gas stations faster.”

Note: it doesn’t matter if any of these selling points are true. They’re just too damn many of them. The Ford brand stands for everything and nothing at the same time.

No surprise there. Big Al inherited a failing automaker rife with warring fiefdoms: corporate enclaves defined by country, brand, product, specialty and, of course, personal loyalty. Ford’s undeniable product excellence is not the result of a overarching corporate effort in any one direction; it’s the offshoot of individual pockets of excellence working to equally admirable but largely uncoordinated ends.

No question: Mulally has moved the entire organization towards a less inchoate structure; one where employees understand that they must reconcile personal ambition with what they have to do for the “greater good.” Unfortunately, efficiency is not a rallying cry upon which great organizations—or brands—are built.

Sure, Toyota gets maximum props (from Big Al as well) for its lean manufacturing system. But it’s product reliability that defines the Toyota brand for both its workers and consumers. Blessed with an overarching brand promise, ToMoCo is free to fuck up and recover. The FJ Cruiser may be a misbegotten platypus of an off-roader, but it didn’t ding the public’s understanding of the Toyota brand.

Bereft of focused, coherent and compelling branding, Ford has an almost infinite number of ways to fail. And few ways to recover. The Flex? What was that all about? How about, say, any Lincoln product? The Lincoln brand? Volvo? Mercury?

Quality, safety, fuel efficiency, technology, luxury, value. Must. Choose. One. Once that’s done, Ford has to build cars that embody that brand promise better than anyone else in the market—regardless of the cost. As I said when I drove the execrable, warmed-over Focus, Ford can’t afford to make money. Not when their brand is in such dire jeopardy. They should cut their portfolio to the bone, choose a shtick and use it to beat everyone in the entire company. And then sell the beJesus out of it. Relentlessly. Endlessly.

Ford had 1,683 suppliers last year. By the end of this year, that number will be down to 850. This is what Tony Brown, Ford’s group vice president of global purchasing, told reporters, one of them from Reuters. Ford is worried about disruptions by supplier bankruptcies, which are a daily occurrence. Triage time: Ford wants to shore up the healthier ones and leave the not so healthy by the wayside.
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Dr. Lyle J. Dennis of GM-volt.com fame has a pronouncement for his flock: “I have seen the electric car promised land.” Dr. D is referring to his visit to “the pre-production operations (PPO) facility at a time where the first genuine Chevy Volts, called integration vehicles (IVers) were being assembled.” (There’s a joke in there somewhere about an IV drip, but it’s not for me to make it.) Unfortunately, Fritz Henderson’s sworn promise of transparency doesn’t apply to photographs of Volt mule assembly, ’cause God knows what Toyota what might do with the information revealed by snapshots of the process. But Dennis is nothing if not sycophantic—I mean resourceful. He offers the EV faithful this shot of “the actual garage door the first Volts will drive off into the world through.” Ending a sentence with a preposition is not something up with which TTAC would put, but we appreciate Dennis’, uh, zeal. “And so without any doubt [yea verily] the Volt has truly been born and its arrival into public production for launch in November 2010 appears at this point an absolute certainty.” Appears to be an absolute certainty, indeed.

Don’t believe the hype. The 1986 Taurus was not “the car that saved Ford.” Trucks saved Ford in the late Eighties and early Nineties, as consumer tastes moved away from the one-sedan-fits-nearly-all market in favor of the newly popular SUV. Nor can the 2010 Taurus save a Ford beset by problems on all sides. There are no longer enough potential mid-sized car buyers to make a huge impact on the company’s bottom line, and most of those buyers are really better candidates for the smaller, more affordable Fusion.

GM’s North American VP for quality, Rick Spina, latches on to the latest JD Power IQS with a blog post at Fastlane titled “What Quality Gap?” and a webchat inviting every pissed-off GM owner to bitch about their quality problems.

For all the naysayers out there … get this … in the J.D. Power & Associates 2009 Initial Quality Study, Cadillac, our flagship brand, improved by 19 percent since last year’s study and comes in third, just behind Lexus and Porsche. That’s pretty darn good considering brands typically improve around 5 percent a year. And Chevy, our volume leader, eliminates the quality gap to join company with very competitive import brands like Honda and Toyota. Simply put, the quality gap is history.

Oh really?

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“A new order is emerging where the Detroit companies may no longer be the volume leaders in their home market,” says GT’s Kim Rodriguez in a release [via PRNewswire] which spins the news as an opportunity for US suppliers. The upshot is that even if the Detroit firms return to profitability by 2012 (hello, Vegas?), suppliers will have to diversify because expansion in US production is coming from the transplants. VW and BMW plan on doubling their US production capacity in that timeframe (to 1m units) while Toyota, Honda, Nissan and Hyundai will collectively add another million units. GT expects other firms to add another 200,000 units of production to the US mix by 2012 as well. Meanwhile, Chrysler and GM are shuttering plants and shedding capacity while taxpayers bail them out in the name of the “American automotive industry and manufacturing base.”

TTAC’s not the only one wondering when Toyota will stop acting like GM. Last February, none other than 84-year-old honorary chairman Shoichiro Toyoda (grandson of the company founder) upbraided 400 Toyota executives by asking them the same thing. “A person familiar with the meeting” told Bloomberg that Toyoda started out by asking lame-duck president Katsuaki Watanabe, “How many times have you made a mistake?” Then he went on to accuse the group of chasing sales and profits and letting Toyota emulate GM and Chrysler by becoming “addicted” to big cars and trucks while ignoring “the customers’ need to save money.”

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