An overview of what happened in other parts of the world while you were in bed. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. WAS is being filed from Beijing until further notice.

And finally, the Nano: Tata’s Nano, slated to be the world’s cheapest car at under $2,000, will finally go on sale in April after months of delay caused by problems at its main production plant, Reuters reports. Tata said it would formally launch the Nano on March 23, and buyers could start ordering the model by the second week of April. “We expect only limited quantities to be produced now—maybe about 3,000 a month—so the waiting period could be long,” said Surjit Arora, auto analyst at Prabhudas Lilladher. Tata Motors’ new Nano plant in Gujarat, in western India, is not expected to be ready until the year-end. The company has said it would make the first Nanos at one of its two existing plants in Pune, about 170 km north of Mumbai, and at Pantnagar in northern India.

Aftermath: Japan’s eight passenger car manufacturers curbed their domestic output by 40 percent compared with a year earlier to 560,471 units in January as they stepped up efforts to correct inventory levels amid a sharp downturn in global demand, the Nikkei [sub] sums up yesterday’s reports. Toyota, Nissan, Mitsubishi Motors, and Mazda had embarked on their biggest cutbacks since they began releasing production data. Daihatsu was the only one to keep its domestic output reductions in the single digits, at 2.7 percent. Production cutbacks overseas also gained momentum, with carmakers lowering output by 41 percent to 602,502 units. Honda curtailed US output 50.1 percent in January. Exports sank more than 50 percent.

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What is quality? Consumers believe they find it in a car that never breaks. Engineers look all the way to the parts level and see how long a given component actually lasts. Advertisers bullshit their way through it, and dealers don’t care so long as the car gets out of the lot before the wheels fall off. As a car guy, I look at how long someone owns a car and WHY they get rid of it. Case in point. I now have access to a database that will eventually cover over 200,000 trade-ins over the course of the year. As someone who has a keen interest in metrics, I’ve found that the current vehicle’s mileage and condition at trade-in time can tell me an awful lot about quality. The findings?

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Euphemisms are our friends. If it weren’t for “calamari” my kids would have never tried squid. Similarly, the SUV became a more palatable version of the station wagon– although I am not sure how the wagon became an object of scorn by my generation. I have many happy memories slouched down in the third row, kissing girls. I suppose piloting one of those behemoths might have tempered my enthusiasm for the genre. The early SUV’s were thinly disguised trucks and evolved to become more like tall wagons currently known as crossovers. If the designers over at BMW have their way, mutant ninja vehicles will soon replace the crossovers. In the meantime, we have the 2010 Lexus RX350.

All day, Japanese carmakers have been issuing January production and sales numbers. They are horrible. Three makers report production reductions of around 60 percent. Mazda and Mitsubishi reported export reduction of over 70 percent. There is a bloodbath in the making in the land of the cherry blossom.

Honda posted year-on-year falls in domestic production and sales, exports and overseas output in January, the Nikkei [sub] reports. Domestically, production fell 23 percent to 77,224 vehicles and sales slid 23.4 percent to 34,160 units, both marking the third consecutive month of decline. Exports dropped by 46.3 percent to 32,934 units and overseas production tumbled 37.9 percent to 149,327 vehicles, both down for the fourth straight month. Compared to others, Honda is doing fairly well, especially due to its burgeoning motorcycle business in the 3^rd world.  And that was the good news . . . .
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An overview of what happened in other parts of the world while you were in bed. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. WAS is being filed from Beijing until further notice.

Paris backpedals after slap from Brussels: France struck a clause from its €6b bailout package. Recipients were prohibited from closing a plant in France and moving it elsewhere in Europe. Automobilwoche [sub] reports that the clause ran afoul of EU rules. Despite the cleaned-up clause, the French government claims there’s a “moral obligation” for the French to stay in France. Brussels will perform a thorough vetting of the French moral imperative.

Russian bailout: Reuters reports that Russia’s car sales have slumped by one-third. In an effort to save its nascent car industry, Russia will subsidize car loans for consumers buying any one of 30 foreign and domestic models. The car-loan subsidies, worth $55.45m, will compensate banks for charging lower rates on car loans. “The decision to help seven foreign brands along with two Russian ones is a surprise coming from a government that introduced sweeping measures in January to protect local car makers from foreign competition,” says a shocked Reuters. The Ruskies have earmarked another $347m to buy up unsold parts and commercial vehicles from local producers such as AvtoVAZ, as well as Fiat, Isuzu, and SsangYong. [For a full list of parts and vehicles eligible for the two aid programs, click on www.minprom.gov.ru] Russia began a 30 percent import duty on second-hand cars on January 1 to prop up the struggling domestic car industry. The move stirred concerns about protectionism from Russia’s trading partners, and led to large-scale protests in major Russian cities that rely on the second-hand car industry.

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Benjamin Franklin said it’s better to be a pessimist and pleasantly surprised than an optimist and constantly disappointed. Followers of Motown’s meltdown—and the wider malaise affecting the entire auto industry—know it’s going to be a long time before the pleasant surprise part of the equation. Bloomberg reports, “Confidence among U.S. consumers plunged to a record low in February, signaling spending will slump further as unemployment soars. The Conference Board’s index declined more than forecast to 25 this month, the lowest level since data began in 1967, from a January reading of 37.4, the New York-based research group said today.” Lest we forget, the housing bubble begat the auto bubble which begat the collapse which lit up the turbos on Detroit’s decline, as it powered unthinkingly on its Thelma and Louise trajectory. So how’s that housing thing going? Do you really want to know?

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Anybody who knows how the auto industry ticks (as long as its clock hasn’t run out) sees the next two items as a given:

1.)    Cars will be more and more crammed with electronics. Already, some modern cars have more computers and networks than a small business.

2.)    Keeping track of the software and its bugs turns more and more into a nightmare.

So far, most large automakers have used their own proprietary solutions, which makes the nightmare even bigger. Many common parts cannot be fitted unless their internal software is “flashed” to be (hopefully) compatible with the car being repaired. Something’s gotta be done. And, finally, it is.

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Instead of digging into the murky finances of federal teat sucker and Chrysler owner Cerberus, The Detroit News has focused its investigative expertise on the automotive lifestyles of the Presidential Automotive Task Force. I’m not sure exactly how this counts as “gotcha” journalism—and neither is author David Shepardson. “The vehicles owned by the Obama administration’s auto team could reflect one reason why Detroit’s Big Three automakers are in trouble: The list includes few new American cars.” Care to expand on that thought David, or just fan the flames of anti-DC hatred simmering in the automotive heart of Bailout Nation? Thought so. Sherpardson reveals that the ratio of domestic owning to foreign driving members is two to eighteen. Shock! Of course, “information was not available on all of the officials, and records for some states were not complete.” Never mind. ‘Cause in this particular witch hunt, if you EVER owned a foreign car you’re named and shamed, I shit you not.

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An overview of what happened in other parts of the world while you were in bed. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. WAS is being filed from Beijing until further notice.

Interest in Saab: Jan-Åke Jonsson, managing director of Saab Automobile AB, said other carmakers were among the investors that had shown interest in the unit, Reuters reports. The Swedish carmaker, granted protection from creditors last week, has said it must quickly restructure to deal with losses, seen at 3 billion Swedish crowns ($347 million) this year, and find new funding from either private or public sources in order to launch new and more competitive models. Germany’s Autohaus reports that Sweden’s government again denied any financial help to Saab.

Opel will hand in homework: GM Europe and Opel finally got their acts together: they will present their long-awaited business plan to the German government in the coming days, Reuters says. The German government distanced itself on Monday from any commitment to Opel’s future.

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Public relations people say the darndest things. Shills for the car companies that chose to speak to the press at the 2009 Dallas Auto Show were no exception. The folks at Chevy are still “excited about the Camaro” a full three years after they excitedly announced the product. What impressive stamina they have. Buick intends to “shatter the myth that Buick only builds sedans for old people” Good luck with that. Chrysler Corp. claims twenty-four new cars and trucks are under development. “If taxpayers can support us, we’ll have some sweet products for you to test drive.” Goodie, maybe I’ll get to drive another redesigned Sebring. That’d be super sweet! But the biggest story coming from the show is what the PR refused to talk about.

“We’re here to talk about product,” the Dodge mouthpiece declared. “Any questions ’bout the company will be referred to Corporate.” This was a common theme. GM’s hackles shot up when a writer asked whether the new Lacrosse would be marketed in China, where the interior and electronics were designed and tested. “We can’t comment on what GM plans to do or not do in China,” the PR hack tersely said, cutting off the questioner. The phrase most oft uttered at the Ford, Buick, and Dodge press conferences: “We’re not prepared to comment on that.”

Other automakers simply didn’t even bother to speak to the press at all. This year’s itinerary of scheduled press conferences was only six manufacturers long and concluded by lunchtime. In recent years we have heard from Toyota, Cadillac, Nissan, Lexus, Hummer, Aston Martin, Saleen, Infiniti, Honda, and Subaru. All of these manufacturers were all present at the show (except Saleen); they just had nothing to say to the press corps.

Furthermore, the first two press conferences, Ferrari and Lamborghini, weren’t press conferences at all. The media assembled at the Ferrari display but there was no presentation so everyone dissipated. It wasn’t until later that I realized that one of the individuals gathered there was actually a soft spoken Ferrari rep. Ditto Lamborghini. Don’t the Italians have anything to tell the public about their cars, how their product is evolving, and all of the rest of the PR drivel that is communicated in a proper press conference?

But enough of all that. Here are the 2009 DAS winners and losers:

Winner: Buick Lacrosse. I’m not saying that this car will save Buick or GM or that it will even sell well. But The General certainly put his best spit-shined boot forward with this car. American styling built by Canadians on a new European developed platform with Chinese innards, this is truly an international car. The car bests Buick wannabes from Toyota and Lexus with dynamic styling and matches them with an outstanding interior. If this car drives half as well as it looks, it could be a contender. Buick claims to be in the midst of a “design renaissance.” That bit of hyperbole might actually be true.

Loser: Acura. Would somebody light that car a cigarette? The grille blighting every new Acura has the expression of Iron Man aglow in post-coital ecstasy—not something I want to see.

Winner: Ford Taurus SHO. Ford designer Earl Lucas shows that Americans can design a mature and subtle executive’s performance sedan. The car possesses the power and elegance of an NFL linebacker in a tuxedo. The D-sized sedan had the press mob drooling on the SHO’s exclusive Atlantic Green paint.

Loser: Chevrolet Camaro. The car is beautiful. The power is impressive. The price is right. The timing is awful. Look for the 2010 Camaro to makes its debut later this year. Its launch coincides with Transformers: Revenge of the Fallen, the sequel of the movie that it starred in two years ago (along side the lovely Megan Fox and the dopey Shia LaBeouf). The Camaro has been so prominent at auto shows and in GM advertising for so long that it’s already due for redesign.

I sat on the front row in the Buick press conference admiring the contemporary look of the 2010 Lacrosse. As I did so I realized that GM could not have produced a car of this caliber ten years ago. Neither could Ford. Life or death competition has forced these companies to break from many of the lazy and lardy practices of their past.

It might be too late for GM to right its ruptured and sinking ship, but the positive and constructive influence of free market pressure is in full display in their latest products. On the other hand, Chrysler remains distinctly unimproved. For every one thing they do right, they are doing five things wrong. This is about the same ratio of incompetence that they operated under two decades ago.  No amount of marketing spin masks that.

An overview of what happened in other parts of the world while you were in bed. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. WAS is being filed from Beijing until further notice.

After Saab, will Opel be next? GM’s decision to push its Saab unit into bankruptcy protection puts pressure on Germany, the UK and Spain to come up with funding to save the rest of GM’s European business, Bloomberg reports. Hours after Saab filed for creditor protection, Opel supervisory-board member, Armin Schild, said the Ruesselsheim, Germany-based unit needs a rescue package that may exceed 3.3b euros ($4.23b). GM has set March 31 for deciding on all its European divisions’ future as the carmaker seeks as much as $16.6b in new U.S. federal loans. Saab’s move to seek protection from creditors “creates a sense of urgency” at Opel, said Laurenz Meyer, a lawmaker and economics spokesman with Chancellor Angela Merkel’s ruling Christian Democrats. On the dark side: some members of Merkel’s Christian Democrats oppose government guarantees for Opel. They say Opel won’t operate profitably in the long term because it lacks an effective business model. They’re also worried that aid would go directly to the US. On the bright side: should Trollhättan-based Saab survive a three-month “reconstruction” under court supervision, the Swedish company may play a role in a more independent Opel. As GM’s only European brand with market recognition in the US, Saab could offer Opel a chance to “re-skin” its products for the world’s biggest auto market. On the sinister side: Most European automakers wouldn’t mind Opel fading away.

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I remember when every liberal Northeast college professor worth his Cyprian latakia drove a Saab. The question is… why? Normally, I live by the Al Reisseian dictate that a brand must stand for one thing, and one thing only. It’s easy enough to identify the USP for most successful car brands. Mercedes = engineering. BWM = driving. Toyota = reliability. Lexus = comfort. Hyundai = cheap. But I can’t for the life of me remember what characteristic typified Saab. Practicality? Handling? No…. Quirky! Huh? WTH does “quirky” mean? Never mind that key between the seats thing. No wait, maybe that IS it. How much satisfaction did a Saab owner get from telling the valet parking attendant “Oh, the ignition’s between the seats.” Knowing (but not saying) that the key positioning was a safety-related “quirk.” Oh wait; college professors don’t use valet parking. But I reckon that somewhere in Saab customers’ collective subconscious they imagined they told a barely post-pubescent car parker where to fit the key. Yes, that’s some complicated shit right there. Which is why no one outside of Sweden could have possibly made the Saab brand a success. GM? Don’t make me laugh. Actually, do. I am genuinely sad to see Saab go. Only thing is, I went through the five stages of grief for Saab more than twenty years ago. 

USA Today’s car coverage is normally a fairly sensible part of a fairly sensible newspaper. But the Motown meltdown has created major distortions in the force. USA Today’s piece “Readers tell us why they stand by their American cars” is odd, from any angle. Clicking on the “enlarge” button of a homo-erotic picture of a guy in combat pants posing in front of a Buick Riviera is only the beginning. Right from the start of the article, it’s clear that scribe Chris Woodyard is so far out of the news loop he might as well check if Elvis is on the moon with him. Either that or he’s having a bad flashback, man. How else can you explain his bell bottom jeans-era take on American cars?

To admirers, the American car is the ultimate expression of freedom, a terrestrial comet skimming across a barren highway.

To detractors, the American car is a fuel-gulping beast, a steel behemoth that symbolizes industrial decline.

Love it or hate it, no other consumer product ignites as much passion or has had such a profound impact on every aspect of American life.

Yet the fate of the American car is unsettled. The nation’s three homegrown automakers — Ford Motor, General Motors and Chrysler — are running on fumes, victims of a miserable economy, changing consumer tastes, a few painful mistakes and the pressure of foreign competition.

A few painful mistakes? I’d would LOVE to see that list. But no, I’ve got to wade through edited sound bites on American car fanatics. To his credit, Woodyard realizes he’s going to have to completely redefine the term “American car” before he unleashes the vox pop– if he’s not going to look like a total ass.

Now the definition of “American car” has shifted to a definition of American car style.

And what is that style?

“A relatively large, easy-to-drive sedan or crossover.

“You can’t find them anywhere else.”

Americans say they would rather buy domestically made products. Three-quarters of 537 car shoppers surveyed on its website by Kelley Blue Book in December said they prefer to buy U.S.-made products.

A third remain loyal to Detroit’s Big 3.

Whoa dude. Nice transition! But you’d kind of hope that a journalist examining an industry hoovering $97b from American taxpayer’s wallets would want a sample size slightly larger than one you could fit into a high school football stadium.

From there… Hey, who asked this guy to write so many words? Words are not Woodyard’s friends. But at least he can find some flag-wavers whose words back-up his uninformed, interminable rant, right?

Give up on the U.S. automakers and you give up on what makes up the “American spirit.” You join hands with the Southern senators, some of whom have never been in manufacturing, in cutting the legs off the backbone of this country.

Speaking of area 51… Seriously though, either Ronnie Schreiber’s brainwashed Madison Heights Dodge Caravan owner Mary Ellen Hoerig, as above, or she’s a great American. Or Wayland’s put words (there you go again) in her metaphorical mouth.

I have always driven a Ford, Chevy, Buick or Pontiac. Mainly because I don’t buy new cars, so I buy an American car because I feel they are cheaper to maintain.

My wife and I feel the quality of the U.S. cars is equal to that of the foreign cars.

Feelings? Nothing more than feelings? Which are way cool when you’re going for non-scientific random samples to back up a pre-existing prejudice. And then, out of the blue, things turn NASTY. “Why I drive foreign cars.” Uh-oh. Who let the dogs out, who?

First, fuel efficiency is important to us as a young family, both as an economic preference, and because we prefer to consume as responsibly as possible. In this respect, American cars have really let us down.

It’s not as if we set out not to buy American. But Toyota and Honda have long outstripped the Big 3, producing cars with responsible EPA gas mileage estimates (while) American automakers were touting the Hummer.

Can someone tell me the advantages of trotting-out uncorrected ignorance on BOTH sides of an issue? No?

We now purchase almost exclusively based on Consumer Reports reliability ratings. So when Honda came out with its first full-size king-cab pickup, we purchased one. With 80,000 miles on our Ridgeline, we have had zero extra maintenance costs.

In tough economic times, my husband and I can no longer purchase based on national pride. We have to have the most reliable, best gas mileage, highest resale option in the class, or we are throwing away money.

And there you have it: another highly contrived piece of non-journalism on the automotive industry that fills the otherwise blank space between ads. There is one remaining question: what does muscle man John Colletti think about American vs. foreign cars?

Last year, Toyota bought 16 percent of Fuji Heavy Industries, Subaru’s parent company. Those who care about such things immediately began speculating about Subaru’s influence on Toyota. Rumors of all kinds of wonderful sporting Toyobarus emerged, from a replacement for the Scion tC to a resurrected rear wheel-drive Celica using just the rear half of the Subie AWD drivetrain. The highly-anticipated (in some quarters) cross-pollination is well underway. Unfortunately, the result turns pistonheads’ dreams into a nightmare. With the arrival of the Impreza 2.5GT, the Toyotization of Subaru has begun.

[Editor’s Note: This is part one of a four-part series. The author writes: I have been a consultant for GM for 15 years and an employee for 9 years prior to that, and have worked at one time or another in almost every region and function. This paper has not been endorsed or supported in any way by anyone at GM; I suspect it will be harshly rejected (or simply ignored) at the senior levels but will strike a deep chord a few levels down. This is written out of the deepest affection for the company and it is an attempt to deal with a fundamental issue that has kept the company from success and is now critical to its long term viability. The people who do care about GM—there are many—and who think a future is still possible need to stand up and try to make a difference, regardless of the short run costs.]

GM has developed a plan, currently before Congress, which is supposed to demonstrate its long run viability. The company is looking at its products, brands, manufacturing footprint and capacity, health care, and “structural costs,” while negotiating with the UAW to further reduce labor costs. All this is well and good but it is almost certain that GM is not addressing an issue that, in the long run, could be more important than all these others: its culture.

Mentioning the “C” word makes eyes roll, as it is seen as too “soft” to deal with in a meaningful way and does not matter anyway once the “real” stuff has been taken care. But to a long-run observer of the company, it is apparent that unless GM’s culture is fundamentally changed, especially in North America (its true heart), GM will likely be back at the public trough again and again until the public finally grows weary and allows its demise. It is unlikely to achieve sustained profitability unless it fixes its culture and it may even be true that once the culture is fixed the business will take care of itself.

Culture means the “values, attitudes, beliefs, and underlying assumptions.”¹ The importance of culture is that it forms the foundation of the business logic brought to any specific decision or problem; there is little chance something will be done that violates the culture, as it would mean contradicting fundamental beliefs. The success of many companies, including McKinsey, P&G, and Pixar, is attributed to their cultures, and a recent study of Toyota concluded its success is due as much to its culture as the Toyota Production System.² Sometimes societies may change their culture in response to a major disruption, as Germany and Japan did after World War II; and companies have as well, such as GE, IBM and Alberto-Culver³, after their own near-death experiences.

But in all of these cases there was a consensus among the leadership that the culture needed to change and serious efforts were put in place to implement those changes. It is fairly apparent from their behavior and statements that GM’s leaders in North America do not believe there is anything fundamentally wrong with the company’s culture; indeed, they seem firmly convinced that they were well on their way to recovery but were overtaken by events beyond their control (specifically the large spike in energy prices and the collapse of the credit markets) that have led to the current recession.

GM’s current response seems to reflect its fundamental beliefs about the way the world works and it’s almost identical to what it has been doing for the last 30 years: cut “structural costs,” wait for future products to bring salvation, and count on cash from the other regions (and, now, the government) to help prop things up in the meantime. But they effect no truly fundamental changes in the business, its structure or the people running it (as they are clearly the best and brightest, know how to manage things in a serious way, and have a sound plan).

The proposed changes are touted as “profound” and “fundamental” but are really the minimum change from status quo the company believes it can get away with. There is a profound reluctance to make hard decisions that would cause short term pain but would lead to fixing the problem in the long run; instead there is a continual compromise of action that leads to “too little, too late” but defers immediate catastrophe. This is reflected in every aspect of the enterprise, from decisions on manufacturing, which never bring capacity into line with market realities, to people, where almost no one is ever fired for poor performance. This has not worked before and it is difficult to believe it will work now.

[To be continued . . . In Part Two, the author discusses the traits that characterize progressive cultures and how these traits (or lack thereof) affect General Motors.]