In case you weren’t aware, TTAC’s publisher (that’s me) and Autoblog’s Editor-in-Chief (sounds painful) John Neff have been having an epic pissing match in the comments section of our blog on their HUMMER vs. Toyota comparo. I took them to task for not disclosing the sponsorship for their off-road safari. Neff signed-on to say there was no sponsorship– except for the vehicles themselves and insurance (which was activated by their blogger’s driving). And besides, WHY DON’T YOU LEAVE BRITNEY ALONE! Anyway, we’re still waiting for that little piece of fair disclosure text under their blog. And needless to say, we will continue to put AOL’s automotive extremity in a Fujiwara armbar as and when we see fit. And this time we don’t see fit. Once again, AB’s Alex Nunez friggin’ well NAILS his live blog of Knight Rider, this time chronicling Season 1, Episode 4. Forbes centogenarian scribe Jerry Flint may feel the need to quote Percy Bysshe Shelley’s poem Ozymandias, but I’m bookmarking Nunez’ Knight Rider screed for my personal posterity patrol. Behold! “8:45: KITT ID’s the guy who poisoned Mike. ATTACK MODE! They plot to intercept. Mike talks to Sarah. He loves her. His heart stops. KITT: “He is dead.” Suddenly, I feel more alive.” And “8:57: Cut to: dreamy sequence. Sadly, this is not heaven, Mike is not dead, and we’re going to probably do this again next week.” In fact, The Hollywood Reporter reports that NBC has ordered-up four more episodes of Knight Rider for Mr. Nunez’ haiku-like evisceration. Can’t wait. No really. I’m a big fan.

OK, before we get hit with a lawsuit, Mark Miller Toyota will not offer the “Bob Marley Special” on new Toyotas. Not that it wouldn’t appeal to at least one Prius driver. Anyway, a Market Watch press release tells us that the Utah Toyota dealer is opening the first and only LEED-certified car dealership in the state. (At least he expects a Gold LEED rating when the paperwork clears “in the coming weeks.”) Designed to maximize local and recycled materials and maximize energy and water-efficiency, the new dealership boasts a number of eco-features. Sun-tracking skylights, a cool-roof system, low-flow taps and toilets, rainwater collection and high-speed service bay doors keep energy bills low, and allow Toyota customers to feel a little better about mean-smuggin’ in their Priora. The most gimmicky best feature? “Anyone familiar with Toyota’s Hybrid Synergy Drive knows there is a screen that shows the car’s energy use over a time period. We’ll have the same sort of panel inside the dealership that shows the building’s energy use over the last half hour or so,” reveals Miller. Up next: employees obsessively turning the A/C on and off and bragging on their blogs about how many cubic feet they were able to “hypercool” on a single kilowatt/hour.

Gordon Murray is calling his T25 city car project “the toughest challenge I’ve ever faced in my design career.” This as his company, Gordon Murray Design, celebrates its first birthday. Even the T25 itself showed up for the bash, swathed in the very latest in plastic wrap. Placed modestly between new and old Fiat 500s and Minis, the Christo-ed T25 comes across as smaller than any of the other city car icons. And make no mistake: Mr. F1 wants the car to be every bit as game-changing and iconic as the classics. In a speech posted at his Planet Murray blog, Gordon points to the Toyota iQ as an evolutionary approach to a city car: good, but not a true re-think. “We believe that the T.25 architecture and manufacturing process will represent the biggest step forward in our automotive world since the model T Ford, exactly 100 years ago. Our business model is quite simple – the architecture includes a separate body/chassis assembly.  The manufacturing process can be adapted to many new powertrains, fuels and body styles.” Talk about raising the bar. (I’ll drink to that.)

First we had Forbes’ columnist Jerry Flint bellowing (meekly) “Remember the Maine!” Now we’ve got Automotive News‘ [AN, sub] engineering beat reporter Richard Truett defending Detroit in that scary ass demented stalker fan club president sort of way. “Here’s what I find especially disturbing: Whenever there’s a story about one of the Detroit automakers on a Web site that allows readers to comment at the end of the article, you can count on loads of vile bile from respondents who can’t wait for GM, Ford and Chrysler to go out of business. For the most part, these are angry people. But… I wonder: How long does GM have to be punished for making Chevrolet Vegas and Oldsmobile diesels or relying too long on the fat profits of trucks and SUVs? When does Ford get forgiven for the Pinto and other crimes against auto mobility? When will Chrysler be let off the hook for making everything out of the K car and for the rotten minivan transmissions in the early 1990s. When will people — environmentalists, especially — chastise Toyota for making its share of gas-guzzling behemoths? WHY CAN’T YOU JUST LEAVE BRITNEY ALONE?” I added that last bit, obviously. Anyway, there’s more after you click on that “more” button below

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Ever since TTAC launched its campaign re: fair disclosure for automotive press junkets and cars, the autoblogosphere’s been pretty good about revealing car manufacturers’ contributions to their cause. Of course, we’d like the sites to be more forthcoming about the exact goodies disbursed. Edmunds attended a manufacturer-sponsored event, to which selected members of the press were invited, to facilitate this report” is both condescending and vague (hotels? meals? flights? accommodations?). But hey, at least our colleagues have stepped-up, uh, towards the plate. Unfortunately, today’s Autoblog Toyota Landcruiser vs. Hummer H2 comparo leaves that particular ethical space blank. We tried reading between the lines… “In this blogger’s version of the debrief after a Moons Over My Hammy [ED: by who?], the finding was that the H2 and the Landcruiser will go anywhere you point them. Period. Anyone who says otherwise is, quite simply, incorrect. The only difference is in how they do it.” I’m thinking HUMMER paid the freight, with Autoblog being nice to Toyota ’cause it’s the better rock climber and Autoblog can’t say that. But I could be wrong. So c’mon Autoblog. You did the mucho macho rock climbing thing. Now man-up to who paid the bills, and what they covered.

There are winners in every financial disaster. There are always a few folks– heroes or scoundrels depending on how they make their profits– who understand that the Chinese symbol for danger and opportunity are one and the same. GM’s impending bankruptcy (and likely Ford as well) will produce some winners. But not without serious financial and psychological risk to those who seek their fortune from misfortune. For those of you with a robust constitution, here’s one potential game plan for GM’s C11. First, some background for those uninitiated in the ways of the American automobile business…

The new car business has always been a boom or bust industry. There’s no such thing as steady growth; sales go up or down in multi-year cycles. During the last decade, Detroit’s fobbed-off excess production on rental car companies, commercial fleets and retail buyers. The strategy helped maintain cash flow. But it distorted sales levels and became a pattern of value destruction. Worse, the automotive sales cycle is now at new lows, with as many as four million units sliced off a “false” peak of nearly 17 million units just a few years ago.

The car business depends on the availability of credit at every level. GM will have to obtain new financing– either from the government or private debt/equity–- to remain in business in North America. Its dealers will need floorplan and buyers of retail paper. It’s a chicken or egg scenario. No one will lend to GM-brand dealers and customers if there’s any question of whether the parent company can stay in business.  Even then, it’s still riskier than lending to Toyota dealers and customers. The only variable will be product pricing; GM’s vehicles will have to be priced accordingly to make up for the extra cost of the financing and bankruptcy risk.

And that’s the opportunity. Buy Chevrolet and Cadillac (and Ford) dealerships now and into 2009 at fire sale prices from distraught dealers. It’s the bottom of the sales cycle and credit is not available. A firestorm of distress that will pass. One just needs the capital to survive the first few months after the filing. New car sales will still be depressed overall, and even worse for GM and Ford due to consumer and lender uncertainty. But that’s temporary– especially if GM follows the previously predicted prescription and launches a series of massive TV advertising and cut-rate pricing (like distress sale levels). Honor the warranty. Keep the flag raised – don’t surrender.

Within eighteen months or so, the recession will end. Banks will again lend and get greedy to find new revenue streams. GM will still be around, producing fewer cars only for its two remaining brands. But those brands will have the best vehicles from across the entire GM lineup.

Chevy will offer the following: Aveo, Cruze, Malibu, Impala, Lucerne (nee Buick), Camaro and Corvette. And maybe a Volt or two. Its Traverse, Tahoe, Avalanche, and Suburban models also remain. But the truck business– that’s where GM will still score (as will Ford) big profits. The housing business drives the pick up truck market and it still belongs to the domestic brands. Housing will come back and so will the truck market. Chrysler will no longer be alive to bother anyone. Chevy will still fight with Ford for light pickups, but at least GMC down the street will be boarded-up and closed.

Likewise, Cadillac will remain as a luxury brand incorporating the best in engineering and design from Detroit. No corners are scrimped, no more Cimmaron mistakes. Rededicated to its roots as the “Standard of the World,” GM’s ability to reshape its mark will continue, especially free from the distraction of the GM dysfunctional brand family.

The surviving GM dealers will have two brands offering complete and distinct vehicles without suffering from internecine warfare. GM, under new executive management and with new owners (maybe even private equity players) will be smaller in North America. But they’ll have products that meet or beat the foreign competition. And with its restructuring, GM can again be profitable at smaller volumes.

It’s a classic “buy low, sell high” strategy. There will be no shortage of Chevrolet and Cadillac stores for sale soon, most for real estate value only or less. Better stores, within markets having significant units in operation already, have a base of customers needing warranty work and service that can keep a store alive. And the used car business, when run right, provides a stream of profits as well.

Assuming GM it makes it through Chapter 11, avoiding Chapter 7 liquidation, the value of remaining Chevrolet and Cadillac stores will soar. Easy money– if you know how to run a car dealership and can stomach the risk. Anyone ready to bankroll me?

Let’s review. GMAC was GM’s “captive lender,” a wholly-owned subsidiary of the artist once known as the world’s largest automaker. You want a loan or a lease at a GM store? GMAC did the deal. It was a cash cow– until it started writing a lot of sub-prime/bad paper in both its automotive division (to keep GM’s cash flowing) and its ResCap mortgage unit (just ’cause it could). When GM CEO Rick Wagoner was looking for a way to keep his job (i.e. dress-up GM’s books with asset sales), he sold 51 percent of GMAC to Cerberus, a private equity group. [NB: Wagoner claimed that he did so to help GMAC’s credit rating. Yeah, that turned-out well.] Cerberus had recently purchased Chrysler, and Chrysler Financial Services. TTAC (and others) reckoned Cerberus would jettison Chrysler’s car-making ops (one way or another), combine GMAC with Chrysler financial and proceed with the business they know and love: finance. When the shit hit the fan for Chrysler– about ten minutes after Cerberus bought the company– Cerberus tried to swap Chrysler for GM’s remaining share of GMAC. Uncharacteristically, GM said no to a stupid idea. When the things got REALLY bad, Cerberus tried to sell ITS share of GMAC BACK to GM. Again, GM passed. And then things got worse…

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Automotive News [sub] brings us the story of Earl Stewart, the Florida Toyota dealer who is waging a one-man war on dealer fees. Born into the car sales business, Stewart noticed one day that his children did not share his love for the family business. Asking his son why he didn’t want to sell cars, Stewart says “He told me he thought car dealers sometimes have a dishonest image. And I had to admit he was right.” After a battle with colon cancer, Stewart decided to make changes in how he conducted business. The first step was removing the $495 “dealer fee” his store had charged, dropping profits by some $200 per unit. But since dropping the fees, he has seen business at his dealership double, and Stewart has been reborn as an anti-dealer-fee crusader. Taking the fight to the radio, television and his blog, Stewart has alienated other dealers who say he is simply advertising his own business. “The world doesn’t need Robin Hood anymore,” one anonymous critic told Stewart. “What we also don’t need is a one-man show trying to run down every dealer on the planet for the good of his own profits.” After attempting to make dealer fees illegal in Florida, and suing another dealer for slander, Stewart still believes in his principles… and his business model. “I know a lot of guys out there depend on these dealer fees — especially right now when the economy is so bad,” says Stewart. “But I did away with them, and my business got better. I can be proud to talk to my kids about what I do for a living. That’s important to me, and it’s important to my sons.”

If you harbored any doubts that Toyota is attacking the soft underbelly of its chief American rival, General Motors, this should eliminate them. Toyota Financial Services (TFS), one of only two AAA-rated auto credit companies, is launching the Toyota Rewards Visa®. Like GM’s card, ToMoCo’s Visa creates rewards points that can be redeemed when purchasing a vehicle from a Toyota delaership. Unlike GM’s card, ToMoCo’s plastic points are also redeemable towards service, parts and accessories. Card holders get five points for every $1 spent at Toyota dealerships, and a buck a point for everything else. There’s no limit to the amount of points a card holder can amass. Points are redeemed at one percent (e.g. $2500 worth of groceries equals $25 down at your Toyota dealer). There’s no annual fee, and a zero percent APR for the first six months. After that? Seems that depends on you. Well, your credit rating.

What’s with Ford and these quality studies? Not for the the first time, Ford has commissioned its own study on relative vehicle quality– you know, initial vehicle quality– and come out on top. Ish. You know; a “statistical dead heat.” Or, to be more or less precise, “With a combined average of 1,284 things-gone-wrong (TGW) per 1,000 vehicles during the first three months of ownership, Ford’s domestic brands improved 8 percent versus last year. This performance is statistically equivalent to the 1,250 TGW level of Honda/Acura and Toyota/Lexus/Scion.” Of course, you have to read all the way to the end, and Google a bit, to see that this PR exercise is Ford-subsidized. “The 2008 model-year GQRS survey, conducted for Ford by RDA Group of Bloomfield Hills, Mich., solicits feedback on vehicle trouble and customer satisfaction from owners of all major makes and models after three months in service.” [JD Powers’ Initial Quality Survey results here.] Anyway, it’s all for one, and One Ford for all: “This is One Ford at its best,” claims Bennie Fowler, Ford group vice president, Global Quality. “It’s taken thousands of people continuously working together with laser-like focus every day to boost vehicle quality for our customers to [just about] the top of the pack.”

Whatever the qualifications and diplomas accumulated by auto executives, it’s a pretty safe bet that they failed mythology. Automobile names are a silly subject already, bring in some of the poorer choices, and you have the makings of high comedy.The assorted Zodiac names are harmless, if a bit silly. I’ll accept that no one at Chevy realized that Cobalt is a poisonous metal named for a demonic imp. But really, who green-lighted “Gremlin” back in the day? Odyssey is a cool-sounding name, but really, shouldn’t it be some sort of mid-life-crisis car? Well, maybe it’s a car for a “homer”. What would Oedipus drive? That’s easy: a black 300 with tinted windows cause he’s one baaad.. OK, I’ll stop. But mentioning the poster boy for tragic screw-ups reminds us of something that does have relevance for today’s auto market, the riddle of the Sphinx.

Just as man has three ages, you can easily divide a car’s age into three: New (just out of the factory), middle-aged (when it is “sold on” for the first time), and old age (when it enters beater-hood). Interestingly, the age of the customer tends to work in reverse. This is both helpful and worrisome for the domestics.

There’s no doubt that Detroit sees new car sales as the purpose of their business. While overall quality is still a bit… worrisome, “off the lot” quality has improved dramatically from the nadir (Nader?) of the 70s and 80s. The only remaining lagging part of the off-the-shelf equation: interior appointments, which are still bad enough to make poking your eyes out sound like a plan. Memo to Detroit, the owner sees a LOT more of the inside than the outside.

While interior quality and option packages are still a negative factor, on price “actually paid,” the domestics are in the ballpark. The real issue is too much “empty” volume, cars that won’t see a “real” owner until their next stage. Like many of their owners, cars can also have mid-life crisis. The dynamics of domestic “new” cars, quite often see their customers passing like ships in the night.

Even at their most arrogant, no domestic honcho will claim quality “parity” after three to five years. Truth be told, it’s usually not that bad. Aside from Toyota, Honda and perhaps Subaru, GM and Ford can claim at least parity with the competition (and parts are usually much cheaper). Given those facts, the re-sale value of the domestics (especially cars) comes as a shock.

The culprit is all those “extra” sales, especially the rentals. This lack of “trade-in” power could well be the single largest factor in the domestics’ failure to retain their customers. Horror stories make better copy, but they are comparatively rare. The bright flip side of this “problem:” the domestics can attract quite a few “value” shoppers, who are much more forgiving of “issues;” they didn’t (wouldn’t and can’t) pay full price.

Unfortunately, for these sorts of customers, upgrading them to a “new” version of their favorite grocery-getter is a BIG step. Buying “off the lot” can mean paying twice or even three times what their old vehicle cost.

By comparison, the Dai-sans’ high retained value keeps buyers in. To combat sticker shock on the old whips, they have emphasized “certified used” programs (Honda’s trailed only Jaguar’s in one satisfaction survey). While it may be harder to sell a 50k mile car with only 25 percent savings, it’s a much shorter step to get such a buyer into a brand-new one later.

If the early stage is full of promise that leads to the conflicts at mid-life, the end-life of the domestics raises a good deal of hope. When you enter the realms of “beaterdom,” one of the most important factors is the cost to keep it running. As our Steven Lang has said many times, the domestics’ relatively simple mechanicals, long model runs (can you say “pick and pull?”) and cheap parts make them compelling proposition.

The Dai-san depend on robustness to offset their more expensive parts. Most of the remaining competition may come cheap, but often becomes a “money pit.” Buying an old Merc/Volvo isn’t too hard, it’s the parts’ cost that kills. This is important because “beater” drivers often move on to something better, especially the teens.

Whether they get them hand-me down, direct from their folks, or purchased with the receipts of some job they’d rather forget, teens are the customers of tomorrow. The single biggest issue for “converting” teen drivers is the disconnect between your father’s old wheels and what is likely to be available when you have a real job.

The real answer to the riddle of ages is: The Big 2.8 will always be creating new customers. It’s keeping them past their first trade-in that’s the problem.

If you’re wondering about the reason behind Toyota’s $250m zero percent marketing blitz, look no further than their very own job bank. Unlike The Big 2.8’s top-secret pool of idled workers, ToMoCo’s labor reservoir is a matter of company policy, not union contracts. With Tundra sales as frozen as the truck’s namesake (down 61 percent in September!), something had to give. The Wall Street Journal reports that “the Toyota plant here in southwestern Indiana and another in San Antonio, Texas, stopped making pickup trucks at the beginning of August. About half of the 4,000 workers are expected to resume making vehicles in November, and now Toyota says the rest won’t likely be back on the assembly line until at least April.” Putting a happy face on a bad situation, “senior plant manager Norm Bafunno said he can already see the benefits of the training. Mr. Bafunno cites a Teflon ring designed by an assembly worker during the down time that helps prevent paint damage when employees install an electrical switch on the edge of a vehicle’s door.” This problem was causing workers to have to do a bit of paint buffing on one or two trucks per shift, back when they were actually building trucks. Meanwhile, have you noticed how little news we’ve heard about United Auto Workers’ efforts to organize the transplants?

Regular readers of this site will know that America’s domestic automakers and their captive finance units are not on speaking terms with the truth. The estrangement continues with news that GMAC (a GM – Chrysler co-production) is tightening-up its lending practices. GMAC spins the announcement as some kind of reflection on their sense of fiduciary responsibility: “GMAC Financial Services today implemented a more conservative purchase policy for consumer auto financing in the U.S. as a result of the lack of stability in the global capital and credit markets. The changes include limiting purchases to contracts with a credit score of 700 or above. Additionally, the company will restrict contracts with higher advance rates and longer terms.” As Automotive News [sub] points out, this is hardly an onerous “limitation.” “For the first seven months of 2008, prime customers with scores exceeding 700 represented 74.3 percent of the U.S. auto loan market.” But the real story is the story behind the story.

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The best part of my job: getting to drive, think, talk, and write about cars all the time. The worst: when someone asks me what my favorite car is. The answer is “all of them.” At this point, the person thinks I’m being a jerk, which I am, but doesn’t understand that car lunatics have a different favorite car every day. And often many favorite cars. Right now, I’m really liking the Jaguar XJ8, particularly because used ones are so reasonably priced. And I also am loving listening to Ferrari after Ferrari on YouTube. Is it a problem? Yes. Is it interfering with my work? Well, yes and no, for obvious reasons. Last week, I was really excited about the new Ford Fiesta, which with any luck I’ll be driving and reviewing later this month. Tomorrow it’ll be something else that I’m really interested in. It’s not my fault. It’s just that I love cars, even when I hate them (see: Lamborghini. see also: Toyota Camry).

Toyota’s been pulling its punches in the U.S. market for years– to avoid the political backlash and lowered profits that a Chrysler, Ford and GM’s collapse would create. Surveying the damage left by a 32 percent drop in September sales, ToMoCo is now saying fuck that shit [paraphrasing]. “The ‘Saved by Zero’ ad campaign began Oct. 2,” Automotive News [sub] reports. “It promotes a 0 percent financing program on 11 vehicles. Dealers say Toyota will shell out at least $250 million this month to cover the cost of the subsidized loans and to fill the airwaves with commercials. Calling it ‘mind-boggling,’ one dealer who asked not to be named said he doesn’t believe Toyota has ever spent so much in a single month on incentives and advertising.'” [That’s what passes for independent, authoritative sources these days.] As one of only two AAA-rated auto lenders (GE Capital is the other) left in the biz, Toyota Financial can do what its competition can’t. And even though U.S. consumer confidence has hit the skids, whatever’s left will soon be headed ToMoCo’s way. In other words, the Japanese automaker is about to eat the lunch AND dinner of the aforementioned domestics.