Automotive News (sub) reports that Toyota is investing $673m in new Japanese battery facilities, with the goal of building one million batteries per year by 2011. A new nickel-metal hydride plant is planned for northern Japan, and a new lithium-ion plant will be built southwest of Tokyo. They're also adding to an existing metal-hydride facility as Toyota expands operations to meet the million hybrid vehicles per year demand it expects in the next decade. Toyota's batteries are built by Panasonic EV Energy Co, a joint venture between Panasonic and Toyota. Details are not currently available for the two new plants, but once expanded, the existing metal-hydride plant will build 300k batteries per year. Reports indicate that lithium-ion production will not exceed the tens of thousands, indicating that Toyota will continue to rely on its proven metal-hydride technology for most hybrid applications. With Nissan jumping into lithium-ion production, and Honda announcing an increased hybrid lineup, Toyota's investment is a necessary step in building on its enviable lead in hybrid production. With about 430k hybrids sold last year, and sales of the gas-electric whips rising at a steady clip, Toyota should have few problems selling a million hybrids annually within the next five years.

The fastest way to kill an automotive brand: sell a POS. The bloodletting caused by a brand new clunker can be spectacular. Anyone remember the 1981 Cadillac Fleetwood V-8-6-4? How about the Cimarron? It has taken Caddy more than 20 years to climb back from that double debacle if, indeed, they have. But there’s another, slower and more insidious way to ruin a storied car brand: distraction. When a carmaker builds a vehicle that muddies the marque’s core message, it mortgages its future. To wit, the Lexus LF-A.

Of course, the Porsche Cayenne used to personify the problem– before the sports car maker released its SUV. Once the Cayenne smashed sales records, purists’ caviling quieted. How can you argue with success? Never mind the long-term effects on branding. Never mind that Porsche’s using the money to buy VW. The market has spoken. Which reminds me of the old punch line, “We’re just arguing over price.”

Talk to me in ten years, when the bloom is off the rose. Meanwhile, building a car that’s a genre too far is one thing. Offering a product that completely betrays your brand values is another. I don’t need to resurrect my arguments against the so-not-a-luxury-car Lexus IS-F. Actually, I do. The new LF-A supercar takes the exact same mistake made by the IS-F to the next level, combing brand betrayal with yet another cardinal sin for automotive brand managers: the halo car.

Like anything else, there are halo cars and there are halo cars. There’s the deeply misguided (I don’t have the money to buy a Nissan GT-R so I guess I’ll buy a Maxima instead) and the just plain dumb (who the Hell can afford THAT?). The best way to separate the wheat from the carbon fiber titanium-covered chaff (needed at those speeds): the price difference between the halo car and the next model down. Discounting aesthetic, genre and brand focus differences, the larger the price gap, the more ill-fated the endeavor. 

The Lexus LF-A will sticker for a cool $225k. The next model down, the LS600h hybrid sedan, costs $104,900. The $120,100 price gap elevates the LF-A from desirable range topper to WTFer– and dooms it to failure.

Just ask Daimler, whose slated-for-execution Mercedes McLaren SLR AMG supercar was a major flop at $495k (not including discount). Or Porsche, whose $440k Carrera GT ceased production 230 cars shy of its stated sales target. And these are brands with heritage, whose prestige and racing history makes their stratospherically-priced products inherently collectible.

The counter-argument is entirely emotional. Supposedly, all halo cars cast an unquantifiable glow over the brand’s more prosaic products. The LF-A will drop-kick Lexus’ stodgy image, making all Lexi more appealing. If I was a Lexus stockholder, I’d be uncomfortable with any multi-million dollar investment based on psycho-babble. If I was a brand manager, I’d want statistical proof that Lexus’ image is somehow lacking amongst owners or intenders, and that a supercar would rectify this theoretical problem.

Toyota is a wealthy company. They can afford to make mistakes like the LF-A without losing any metaphorical sleep. But it is a particular KIND of blunder, one that reveals a dangerous new turn in ToMoCo’s corporate attitude.

Speaking of baseless psychological speculation, I believe that building and selling a supercar is a bold statement of corporate health and vitality. Can you imagine Ford releasing its $140k GT now? A halo/supercar says to the world, look at us! THIS is what we can do! (Or never mind the Focus, THIS is what we can do!) But there’s a fine line between being bold and hubris, and hubris and stupidity.

This is why Toyota has cultivated a corporate culture based on paranoia. Fear keeps you focused. You never, ever forget the downsides of any of your potential actions. You always look for the safest option– especially when you’re doing something dangerous. Traditionally, the Toyota Way follows Sun Tzu’s dictate: never to fight a battle unless you know you’re going to win. It’s not for nothing the first Lexus looked like a Mercedes E-Class.

The new Tundra’s sales targets represented a huge miscalculation by the Japanese automaker’s product planners that will cost Toyota billions. And now, the LF-A boldly goes where Toyota has never gone before, both in terms of money and image. Why? For what are they trying to compensate? Lexus would have been far better off transforming their dopey SC into a credible Mercedes SL challenger. Or continuing to refine what they already have. Or just sending their loyal customers a nice “thank you” service voucher. 

I know TTAC’s Best and Brightest welcome automotive excellence in all its forms. But sometimes excellence is boring, and comes from slow, steady progress. It’s a lesson Toyota taught the world. The LF-A is another step towards unlearning it.

It seems like just yesterday that we brought you pictures of Kia's concept car, the Soul. And it actually was just yesterday that commenter Russell noted that Kia doesn't have an "it" car. What a difference a day makes. Kia [via www.kia-buzz.com] has revealed the official production version of its newest compact hatch, the Soul. It's meant to compete in the smaller segments of the car population– although whether it's a B-segment car (Honda Fit/Jazz, Toyota Yaris, Ford Fiesta) or a city car (Fiat Panda) remains to be seen. What we do know: it retains most of the concept car's somewhat distinctive styling, and that Kia will do the reveal thing at the Paris Auto Show [RF: you are sending me, right?] in October. Considering Kia's optimistic goal of doubling non-Korean sales by 2010, you can bet your Rio that the Soul train's coming to North America as fast as they can crank 'em out.

GM's Vice-Chairman has (characteristically) been all over the map about the Volt's price. The Winner of TTAC's Bob Lutz Award has pegged the plug-in electric – gas hybrid's eventual sticker at everything from "around $30k" to $48k to $2.99 plus tax (just kidding; what's the bet there won't be any tax). And now Maximum Bob's boss has finally added his two bits on the Volt's msrp. In an interview with Germany's Frankfurter Allgemeine, GM Chairman Rick Wagoner threw down the gauntlet. "GM has a clear goal: we want to bring the Volt to the market in 2010 at a price of less than $30,000." Want. Not will. But wait there's more! Wagoner also says that "unlike Toyota, we want to make money on the Volt from the beginning. And the obstacles to that are reducing the price of the batteries and convincing the consumer of the advantages of the Volt." Profit? As in sell the Volt for more than it costs to make, from the get-go? Toyota didn't make a dime on the Prius for many years (the exact margins are unknown). Will Wagoner even be around to eat his words? Place your bets here.

Unlike arm wrestling or Martini making, when it comes to currency, there’s an upside to being weak. Especially if you are, say, an American car manufacturer fighting pesky foreigners.  As the value of the dollar falls overseas, the price of American-made cars and trucks falls as well. Theoretically, a lower price should mean increased demand. So, is the declining U.S. dollar the cocktail Detroit needs to lift their spirits? 

Between 2002 and 2007, American auto exports doubled, from about $25b to $50b. Over the same period, imports grew to $150b (they’ve leveled off for the last 18 months). The bad news: exports from General Motors, Ford and Chrysler combined equals a third of the vehicles the US imports. What’s more, roughly half of The Big 2.8’s exports are sent to Mexico and Canada.

The good news: America has stopped demanding that more cars built elsewhere. The rest of the world is slowly opening to the important of American metal.

Russia is a growing market for big SUVs (while America is growing parking lot for same). Sadly, Russian import tariffs make the Berlin Wall look like a welcome mat. In this they are not alone. And over the last few years, U.S. foreign policy has been something less than persuasive when it comes to removing trade barriers. Meanwhile, the Euro market has deflated. And the go-go growth in India and China is slowing.

Even so, both GM and Ford are escalating exports, specifically those aimed at China and Latin America. Chrysler is shifting some of its manufacturing back to the States. It’s a slow process. Chrysler, for example, plans to move more Jeep production stateside as soon as its contract with Austria’s Magna Steyr runs out. In 2009. All three automakers suffer similar hand-tying. And none of this is happening in a vacuum.

While Detroit tries to adapt to changing economic conditions, Aichi and Munich move their pieces around the board as well. Every major auto manufacturer has a facility in the U.S. As the dollar appears to be in the doldrums for the foreseeable future, many are looking to expand or add capacity in the New World. BMW is building the next generation X3 in its Spartanburg plant, right along side the X5. (Magna Steyr will be losing that contract too.) Volkswagen/Audi/Porsche is/are looking to construct a new plant in the U.S., possibly North Carolina.

All of this is good news for the American worker. Mitsubishi not only builds vehicles in American for Americans, they export. The numbers are still paltry– Mitsubishi will export around 12,000 cars this year– but auto exports are trending upwards. Honda, Toyota and Mercedes export from the US. They are adjusting quickly.

Exactly how much a discounted dollar changes price is as murky as any car deal. Carmakers contracted for the steel, copper, plastic and other commodities being formed into a car this morning months or years ago. The parts going into a vehicle come from all over. While the dollar slid 11 percent against the Euro in 2007, the rate is different for other currencies. The dollar has been in a steady decline for six years, so everything is in flux. It is not unreasonable to assume a 10 to 20 percent premium on Japanese and European models. Or the flip side– 10 to 20 percent off American rides.

So the Cobalt should be the new Wii, right? Regardless of how much The Big 2.8 would like to make money in real estate and mortgage derivatives, it all comes back to cars. The bottom line: Detroit did not prepare well for this moment.

Some cars built in America are, in theory, ready for foreign service: Jeeps, Corvettes, Cadillacs, Chrysler minivans. But these are specialty items not found in the bread and butter aisle of the market. They sell in tiny numbers, if at all (Cadillac BLS). Although GM (Chevrolet, Buick) and Ford (Ford) have some brand equity in foreign climes, it’s based on locally/foreign-made products.

It’s hard to think of a single Big 2.8 product that’s ready to be shipped abroad in large numbers. While GM-Ford-Chrysler scramble to adjust their U.S. product mix to reflect high fuel prices, they’re behind the curve, and will be for some time. And despite all this talk of downsizing, American cars are still over-sized for most foreign markets. The constant bloating of transplant product proves that size still matters, and doesn’t translate.

Exports from the States have increased, but it is going to be real tough to make those numbers grow without product the rest of the world wants. Leaving out North America, the Ford F-150 is not the world’s best selling vehicle.  The rest of the globe likes lithe, economical Golf-Corolla-Civics. As Detroit wrestles with another lost opportunity, let me suggest a good, stiff drink.

Who woulda thunk it? Due to their high gas mileage, old Geo Metros are sought-after cars. Laugh if you want, but "Marci Solomon is hoping she'll be the one laughing- all the way to the bank -when her Geo Metro saves her from skyrocketing gas prices," according to CNN. Solomon has a 100-mile commute to work and her Honda Element was getting 28MPG, causing her to fill up twice a week at a cost of almost $100. So she began searching for an alternative and initially "toyed with the idea of purchasing a Prius," until she "rediscovered" old Geo Metros for sale on eBay. She focused on a 1996 two-door, three-cylinder, which opened with a $200 bid, and eventually "won it" with her winning bid of $7,300! Her ‘96 Metro's "average of 40 miles per gallon approaches that of a new Toyota Prius," and "bests most current cars by a long shot." Solomon says "I used to be a car snob, and I used to be too vain to drive anything that doesn't shine; but now it's about, ‘do I want to eat, or do I want to make it to work?' I want to do both." Even though she paid "more than five times the Blue Book value of the car," Solomon figures it's "an investment in the future." "It was all about saving money," she says. Indeed: Solomon has acquired another Metro, is "considering flipping [it] on eBay for profit," and "has her eye on a third at a local car lot." You go girl!

Honda has long played second fiddle to Toyota in the hybrid powertrain department, especially from a public relations standpoint, but also in terms of technology, sales volume, and fuel economy. At least they've redoubled their efforts: Automotive News [sub]  reports a push to increase sales tenfold to 500k per year with four different models: the current Civic Hybrid, an upcoming dedicated sub-$20k model, a sporty hybrid previewed last fall as the CR-Z, and now an upcoming Fit hybrid in a few years' time. Although that's only half the annual sales that Toyota is projecting early in the next decade, all will be affordable and fuel efficient, unlike the short-lived V6 Accord Hybrid.

Think a Bugatti Veyron is pretty exclusive, what with its million dollar plus price tag? Maybe you think the new Rolls Drophead Coupe is a rare bird? In reality, all you need to roll down the street in one of these dream whips is money. Green Car Congress reports that only 200 drivers will "win" the right to lease a hydrogen fuel cell-powered FCX Clarity over the next three years. Oh wait, Honda's splitting the number between Japan and Southern California. So far, over 50k Californians have applied for a hydrogen-powered "it"-mobile. O.K., yes they'll need some money; $600 per month. The first cut will reduce the list to approximately 500 people who live near designated (if unbuilt) hydrogen fueling stations in Santa Monica, Torrance and Irvine. The chosen ones will receive an e-mail prompting them to take a customer selection survey. The Zero Emission [at least at the tailpipe] Powers That Be will chose the final 100 lessees based on driving patterns, vehicle needs, vehicle storage and– OK, again– financial criteria. Oh, that's after "an interview with Honda America." Yeesh. Maybe if they find out that you also own a Toyota, they'll vote you off "Clarity Island."

MSNBC reports on dismal sales of the overhyped Dual Mode Yukotahoe Hybrid, currently running hundreds of units per month. Given its $50k+ price tag and complete lack of wiggle room on price (especially compared to its non-hybrid counterparts), this comes as little surprise in the extremely price-sensitive US market. Unfortunately GM and their hybrid transmission factory, projected sales were 10-15k units this year. That's not quite as bad as TTAC's whipping boy (the Cadillac BLS), but underutilized capacity is a Very Bad Thing in this economic climate. What does this mean for the upcoming Saturn Vue Dual Mode Hybrid? It's estimated $30k price tag just might be the sweet spot. Or not. GM's losing ground in the hybrid SUV race on a daily basis. In the Yukotahoe Hybrid's price range, Toyota's already sold 5,553 Lexus RX 400h's this year. And in the Vue's venue, they've sold 8,889 Highland Hybrids. Even Ford is leaving them in the dust, with 7,132 Escape and Mariner Hybrids out the door since January 1.  

The harsh realities of a mature US automotive market are wrecking havoc on the plans and finances of all the players. The Wall Street Journal reports that 15 million units is about the best the industry can hope for in '08. That's back to the future, 1990s style. Even market share-gobbling Toyota senior executives admitted they have "about a full plant's worth of excess capacity in North America– not including the Tupelo plant due to open in 2010." Holy excess capital expenditures Batman! The master of production planning has hit the wall. Bottom line: the US is a stagnant, mature market where new cars are competing for replacement business, not growth. Meanwhile, more manufacturers are threatening to enter the US market. The Chinese and Indians (Tata) are chomping at the bit, and Alfa-Romeo has announced plans to return… soon. Analysts forecast a return to growth in the decade ahead. Still, clearly, not everyone's going to make it.

While Chrysler is busy berating its suppliers to cut costs by setting-up shop overseas, Toyota is about to export U.S.-made vehicles to foreign climes. Asahi Shimbun [via Reuters UK] informs us that "Toyota, the world's biggest automaker, will begin shipping the Sequoia large sport utility vehicle to the Middle East some time this year, and the Sienna minivan as early as 2010 to China and other markets… A Toyota spokesman said the automaker was always looking for ways to best supply vehicles on a global basis but declined to comment on the report." The report is good news for workers at ToMoCo's Indiana plant. And there is precedent here. Last year, Toyota sent some 7k American-made Avalon sedans to the Middle East. With the current slowdown (as in collapse) of the U.S. truck market, how long before Texas-built Tundras (same platform as the Sequoia) apply for a passport? Why we could see a whole new generation of African warlords driving modiified American-made Japanese pickups. 

Union problems, soaring gas prices and a faltering economy made April the worst month for new vehicle sales since 1995. Continued production in the face of diminished demand helped maintain the manufacturer's cash flow, but it lead to the inevitable: swollen inventories. In other words, even as U.S. new car sales go down the toilet, the toilet's backing up. Fix the number 60 in your mind (the ideal number of days' supply for a new vehicle on a dealer's lot) and take a look at what's going down at your local automotive emporium.

You'd think GM's production "hiatus"– caused by the American Axle strike– would have reduced the General's truck inventory. Nope. The U.S. automaker ended April with a 109-day supply of trucks, up from the previous month's 98-day supply. The Buick Enclave's and GMC Acadia's low dealer stock (38 and 54 days, respectively) couldn't offset lingering Chevrolet Silverados (122-day supply), Tahoes (125 days), GMC Sierras (122 days) and Yukons (188 days). All four trucks were more abundant than they were during the month previous.

Ford's truck inventory wasn't quite as scarifying. A 39-day supply of Rangers and a 54-day supply of Escapes helped lower their truck inventory average to 80 days by month's end. Meanwhile, the F-Series' dealer inventory jumped from March's 97-day end-of-month supply, to April's 129 days. The Expedition's inventory rose from 67 to 98 days. Even though it's one of Ford's best-selling models, the Edge went from a 69-day to a 107-day supply. 

With Chrysler's plummeting sales, it's no surprise their inventory's up. The lame duck Dodge Ram's inventory jumped from 99 days to a 109-day supply. Dealer stock of the unloved Dodge Dakota ballooned from 73 to 110 days' supply. After starting with an 81-day supply, Jeep ended up with a 102-day stock of Grand Cherokees. The new Dodge Journey was ChryCo's sole bright spot. The CUV started April with a 130-day supply and ended with 57 days' supply on the lots. 

Of the two truck-heavy transplants Toyota fared best. They don't list inventory by model, but they finished the month with a 52-day supply of trucks, up only two days from the end of March. Nissan's numbers represent the nadir. Murano (76 days) and Rogue (82 days) clogged dealers lots the least, while Armada (203 days), Titan (232), Xterra (198) and Frontier (137) were super-abundant. 

No question: 2008 is the year of the car. As consumers left ten-foot pole marks on high profit trucks and SUVs, car inventory numbers were their best in months. The Chevrolet Aveo dropped to 65 days (from March's 113) and Cobalt finished the month at the 52-day level (down from 75). GM dealers started April with a 37-day supply of Malibus; they ended it with a 36-day supply. A 21-day supply of Impala turned into a 22-day inventory. The only real dogs were the Pontiac G6– which went from a 43- to 64-day supply–and Saab. GM doesn't break out their Swedish division's individual models, but the ostensibly Swedish brand started the month with a 77-day supply, and ended at 151.

As you might expect, Ford dealers are moving more small cars than big. The Taurus started the month at 60 days' supply and finished at 73 days. Volvo ended the month with an 88-day supply of 70-series, up 11 days.  FoMoCo stores' supply of Fusions dropped four days, starting at 52 and ending with 48. Their stock of Focus dropped by 11 days, to 43.  The 30-series Volvo ended April at a 94-day level, down from 120 days.

April was a mixed bag for Chrysler. The 300 went from a 61-day supply to 82 days, the Sebring shot from 42 days to 69 ,and Avenger finished at the 51-day level after starting at 35 days. On the other hand, Caliber's inventory dropped from 48 days to 39, Charger went from 58 days to 41 and the reportedly doomed PT Cruiser ended the month at 38 days' supply, after starting at the 50-day level. 

Toyota began April with a 51-day supply of cars and finished up with a 53-day supply overall. Nissan began with the ideal 60-day level of Sentras and ended  with a 59-day supply. Versa's inventory dropped from 53 days to 51. Altima, however, went the wrong direction, finishing at the 71-day level after starting at 48 days. Honda had a 67-day supply of Accord on the lots on April 1; on April 30 they had a 72-day supply. Civic inventory dropped from 52 days to 48 and Fit went from 27 days to 22.

The manufacturers are taking steps to adjust these inventory numbers- GM has even stopped filling orders from dealers for many of their large trucks. However, with sales down it could take months to get things leveled out. In the meantime, look for increased fleet sales and bigger incentives as The Big 2.8 and Nissan do whatever they can to clear the lots. Also look for Toyota to ramp up incentive spending gradually, balancing the need to move the metal against creating incentive-dependent customers.  

All the big boys test their latest performance gear on the Nurburgring's Nordschleife. But only the truly committed (and confident) campaign their gestating hotness at the Nurburgring's 24-hour endurance race. We've already reported that Toyota will be challenging the event with their Lexus LF-A supercar (despite its being a good year off from launching). But even before ToMoCo's hypercar turns a wheel in anger, they've been one-upped in the ballsiness department. The tiny Gumpert Sportwagenmanufaktur is entering the grueling endurance race with a hybrid-electric version of its Apollo supercar. Out comes the Apollo's 4.2-liter Audi V8; in goes a 3.3 bi-turbo V6 with a Lithium Technology Corporation battery mated to a 100kW electric engine. The EV will charge its batteries by plugging into the electrical grid prior to the race. During the event, the car will beam its battery management data to the team's pit crew via sat phone. Former F1 Champ Heinz-Harald Frentzen (along with Dirk Muller) will helm the ambitious challenger, capitalizing on improved efficiency to pursue a less frequent pit strategy (as Audi did with its diesel Le Mans challengers). "Motor sports cannot ignore the necessity to save energy," say Frentzen (excepting private jets and helicopters). "I see a chance that our sport will go back to the forefront of technical development."  I for one would like to see these guys chalk up a few extra laps while the LF-A is in the pits, if only to put Toyota in the unfamiliar position of wishing it had invested more in hybrid technology.

And so it continues: the debate about the Toyota Prius as a fuel saver/economy car/green badge of honor/etc. over on Captain Mike's review. Sammy Hagar's off-hand comment about the Prius cannibalizing Camry sales intrigued me. For some strange reason– not anti-Detroit bias I can assure you (if you can be assured)– I'd never thought of the Prius as a cannibal. But it makes perfect (imperfect?) sense. If you're in the market for "inexpensive, efficient, reliable transportation that makes you feel good about not driving anything else," why wouldn't you choose the Prius over the Camry? Or, for that matter, the Camry over the Prius? We've heard rumors that ToMoCo's going to launch the Prius as a fourth brand. On one hand, yes. On the other hand, uh-oh. Toyota's entirely useless Scion brand (remind me again what PRODUCT-related focus they bring to the table) is one GM-style branding mistake. Launching a Prius brand would be another. In fact, it looks to me like Toyota could, some day, maybe, not beyond the scope of possibility, become the new GM (especially when the old GM goes C11). Hey, empires rise, empires fall. C'est la guerre.  

To my eyes, the Toyota Prius looks like an Area 51 reject: an ungainly sci fi fantasy devoid of charm or beauty. To its admirers’ eyes, the Prius is the latter day equivalent of a Model T or a VW Bug: an automobile whose virtues– and virtuousness– transcend the normal dictates of style. And THEN there’s the debate about propulsion, premiums and politics. It’s hard to think of another car that’s been this polarizing– for both manufacturer (Maximum Bob) and the end user (a.k.a. car buyer). And yet, just as sometimes a cigar is just a cigar, sometimes a car is just a car. Ah, but is the Prius a good car?