In a recent article in the New York Times, reps from GM and Toyota both told the newspaper that they are optimistic about the automotive market in the near future. They felt this way especially in light of the declining interest rates (checked your savings account's variable rate lately?) and the $600 stimulus checks that the Federal government is sending out … some time or the other. Without getting into an economics debate here, let's just say that $600 isn't a whole lot of money, the last year's worth of Fed actions cutting interest rates hasn't helped, Americans are in over their heads with debt, and GM has been offering 0% financing on cars for years. Ford is pleasantly candid in the article, saying "I'd like to be able to tell you the worst is behind us, but I really can't give you that assurance." In fact, Jim Farley at Ford (remember when he ran Lexus?) thinks that next quarter is going to be even worse. The article is just a gold mine of reality checks though, like Chrysler VP Steven Landry saying "I don't know if I can take another March like this one" and Toyota's US chief Bob Carter insightfully opined "We're not immune to economic cycles and downturns in the automotive industry."

The full-size SUV, species Gigantus Utilitas Amnericanus, stands like a mighty and proud American Bison. The even-toed ungulate’s wet nose nervously sniffs the threatening winds of change that blows across the prairie and buffets its coarse brown mane. For now, the herd stands proud and strong in suburban habitats. But today the mighty beast catches the scent of three long rifle-wielding predators: Panic, Price and Patriotism. Squarely in their sights stands the Ford Expedition King Ranch Edition.

OK. So it turns out computing monthly auto sales is somewhat akin to doing taxes– it depends on who's doing the figuring. Using Automotive News' [sub] numbers (which we also use for the "By the Numbers" analysis), and ignoring the accounting slight-of-hand known as "sales days," Chrysler's March sales sank by 19.4 percent compared to last March, to 166,386 vehicles. GM's sales dipped by 18.7 percent, to 280,713. And Ford moved downwards by 14.1 percent, to 226,448 units. As you'd expect in these gas-conscious times, light truck sales (or lack thereof) account for the lion's share of the losses (down 15.5 percent in GM's case). As these vehicles also account for the majority of the domestics' profits (or lack thereof), that's gonna leave a BIG mark on their balance sheets. And don't get to thinking that "at least they're maintaining their market share." Although Toyota took a 10.3 percent hit in March, Honda and Nissan each dropped only 3.2 and 3.8 percent respectively. In a generally lower market (down 12 percent), they're eating someone's lunch. 

David Kiley of Business Week (via MSNBC) dives into the CAFE issue, and in the process rounded up a wild-and-woolly collection of quotables from some of the biz' top bosses. The biggest news comes from Chrysler's Jim Press, who claims that that when he was at Toyota "the Japanese government paid for 100% of the development of the battery and hybrid system that went into the Toyota Prius." Although the revelation reeks of Japan Inc. business/government collusion, let's remember that our own government funneled over a billion to U.S. automakers at around the same time through the Partnership For A New Generation of Vehicles. The fact that the American people got little more than three concept cars is hardly the fault of the Japanese government or Toyota. Still, Press' revelation does shed some light on Toyota's current dominance of the hybrid market. Meanwhile, Bob Lutz continues to symbolize America's inability to meet the new demand for efficiency. In the same piece, Lutz unveiled the next generation of "Maximum Sticker Shock" for the forthcoming Chevy Volt: a cool $48k. Get some perspective on that number here.

New car sales in Japan have dropped for the fifth straight year, to their lowest level since 1975. Thomson Financial (via Forbes) cites a Japan Automobile Dealers Association study which points to high gas prices as the prime culprit in recent sales losses. Even Japan's 660cc kei car category is feeling the hurt, dropping for the twelfth straight month. Japanese automakers have been fighting sliding sales aggressively, rolling out new models and pouring money into marketing gimmicks like Toyota's Auto Mall . But there's nowhere to run in such a saturated market. Honda, Nissan, Subaru and Suzuki posted modest sales gains in March, while Lexus dropped nearly 18 percent, Isuzu dropped 12 percent, and Mitsubishi lost nearly 14 percent of sales. The biggest losers? Truck manufacturers, who saw between 12 and 27 percent losses. If economic misery loves company, America and Japan could be best of friends.

Michigan-based ForeSee Results has set a new record for weirdest company name developed the first Automotive Website Satisfaction index, which shows that online car purchasing has plenty of room for improvement. The Detroit Free Press reports that Honda's website logged the best score among the six top brands in the 2,000 respondent survey, scoring an 80 compared to an industry-wide average of 78. The index uses methodology from the University of Michigan's American Customer Satisfaction Index and measures how effective the sites are in giving consumers the information they want, getting them into dealer showrooms and driving sales. With the the Detroit three, Honda, Toyota and Nissan all rating between 80 and 76, there's not much to differentiate between them, but there's plenty of opportunity for all six to improve to the 88 scored by Amazon.com. "You walk away from these Web sites feeling like they were designed by a committee," says Larry Freed, president and CEO of ForeSee Results. "There's a lot of noise on them."

For the first time since WWII, UAW membership has dropped below half a million hardhats, reports the Kansas City Star . The news comes from a Labor Department filing, which shows that the union was down to just 464,910 members by the end of 2007, compared with 538,448 at the end of 2006. This continues a trend of decline for the union since membership peaked in 1979, at 1.5m dues-paying members. Many of the losses can be tied to the dismal performance of the Detroit automakers, who have been cutting jobs, closing factories and buying out workers in hopes of returning to profitability. With American automakers tanking and taking their membership with them, the UAW is trying to rebound by targeting the North American factories of Toyota and Honda. But the transplants have carefully avoided building plants in union strongholds, and have thus far held off attempts to unionize their American factories. And no wonder. Although the UAW has done well by its members over the years, its colossal pension liabilities and uncompetitive approach to wages have been an undeniable factor in the decline of Detroit.

As the latest GM Death Watch predicted, the GM apologists are getting warmed-up. Note to The Big 2.8's PR departments: hire the Detroit News' headline writer. Better yet, don't. Why risk losing such a public champion? After all, there is no evidence that GM, Ford and Chrysler ARE successfully clinging to their U.S. market share. Or WILL cling. And while you're wondering who to thank for cutting the words "try to" from the headline, it's best to keep scribe Sharon Terlep happy. Ms. T starts, helpfully enough, by moving the goal posts: "But preventing foreign-based rivals from stealing more buyers will be crucial to putting Detroit's automakers in a good position once sales eventually rebound." And then she trots out Michael Robinet, vice president of global vehicle forecasts for CSM Worldwide. "Robinet said GM is likely in the best position to hang on to market share with a string of popular new products such as the Chevrolet Malibu, Cadillac CTS sports sedan and the Buick Enclave crossover." None of which are conquesting transplant buyers or setting the sale charts on fire; all of which are the GM turnaround poster girls. And just because GM may be in the best position relative to Ford and Chrysler doesn't make it a good position relative to say, Toyota. Or Honda. Or Nissan. Or Hyundai. Or Lexus. Or… 

“You’re free to go.” With those hackneyed words, the Goldendale police officer returned my license. They were the very same words I’d heard in my head just a few hours earlier. At one-thirty last Sunday, my older son Ted called: “If you can drop Will [(his brother) here by three, we can take him back with us to Portland for a few days.” Cabin fever was at 103. The ninety minute deadline to pick a destination and pack the xB was just the tonic I needed. Time to head for… (flings open the atlas)… Wenatchee! Read More >

Fact: Jaguar sold 54k cars last year. Fact: Jaguar sold 70k cars in 2006. Fact: Just-auto [via Motor Authority] says Jaguar sales "could potentially double within the next couple of years." How's that? "Forecasts compiled by just-auto map out Jag's production future for its four main models – the X-type, XF, XK and XJ – and foresee volume rising to a more sustainable number closer to the magical 100,000 mark." Sorry, but no fucking way. But wait, there's more! "Possible new models in the Jag product plan, which await the green light from Tata, could further lift this figure towards 150,000 by 2012/2013" The XJ is an albatross and the X-type is the brand's cancerous Achilles Heel. I'm just going to start playing it their way. I'm predicting that Chrysler is going to launch an unspecified new model at some future date and they will sell more cars than Toyota. Like, lots more. In the future. Lamborghini, too. Man, this is fun. Hey Farago, where's my check?

CNET News stipulates that plug-in hybrids get more mpg and emit fewer pollutants than standard cars or hybrids, but objects that it would take decades of driving to actually save any money by driving one. According to several months of data from RechargeIT.org, plug-in Priora only use about 88 fewer gallons a year than unplugged Priuses in urban driving, saving between $158 to $250. A $15,000 CalCars conversion would take 60 years to recoup, and a $55K AC Propulsion upgrade – well, forget saving money there. Motion granted, but CNET misses two a Priori points: First, many people didn't originally buy Priora to save cash, they bought them to save the planet – and to be seen as saving the planet. RechargeIT's engineering product manager, Alec Proudfoot, says, "the big focus … is on the CO2 savings, not the cost savings." Second, many people who remember sitting in gas lines, see plug-ins as a hedge against having to do so again. Nevertheless, unreliable batteries may dissuade even the most ardent eco-warrior from relying on a plug-in to get there and back again.

That, my aspiring plug-in friends (2010), is a Hell of a lot of Priora. Nikkei English News [via Bloomberg] reports that Toyota's ramping (amping?) up Prius production at its two Japanese factories to increase overall output by a full 60 percent. ToMoCo's aiming to shift 450k gas – electric hybrids worldwide in '09. No word if and when (not to mention why) Toyota will expand the Prius into its own sub-brand, as rumored on the internets. And the U.S. market for Priora has suddenly gone soft. Although Toyota's sold 181,221 Priora in '07, and the model's up 8.5 percent year-to-date, February sales declined by 10.9 percent. Could we about to see another price cut to move the metal? It sure worked last time.

Scrap metal. The phrase may not mean much to you, a pistonhead who takes pride in his ride. But scrap is one of the most lucrative industries in the car business today. That old junk car in the neighbor's yard that would have been lucky to get $50 seven years ago is now going for over $200– on the steel content alone. When you throw in the recyclable platinum, aluminum, copper and lead into the mix, the revenue on an average junker is anywhere from $350 to $600 per vehicle. This inflation has implications for both the average Joe and the entire American automobile industry.

The environmental benefits of this market for dead cars are obvious. Vehicles that were once put out to pasture– with toxic fluids spilling into the soil and the surrounding landscape– are now, thankfully, a rarity. Companies are draining, crushing and recycling aluminum and copper radiators. Old batteries now go for $15 in many areas of the country. Even the rims that were once left on the beasts of old are being recycled and re-used by everyone from GM to the People’s Republic of China.

In short, simple economics has motivated both mature and developing automotive markets to do what environmentalists have been calling for over many decades: clean-up the remnants of our past consumption. 

The other far smaller benefit to recycling is local, or, to put it another way, industry-specific. The American scrap dealer buying all that leftover refuse is making some serious cashola. China has a nearly insatiable appetite for industrial junk, and they are far from alone in that demand. Japan's scrap iron and steel prices rose to $460 per ton this week. This competition for any old iron is putting some immediate money back into the hands of the recyclers. These local business’ neighborhood communities are enjoying the benefits of record prices for copper and steel. Many recylcing companies are investing in new technology.

Unfortunately, the seller’s market for scrap pretty much leaves everyone else in the proverbial lurch. Despite the current downturn in automotive sales, worldwide demand for car-building commodities has not, and can not, be satisfied by recycling. Commodity prices are still soaring. And that means that today's automakers have to juggle three not-so-pleasant options: raise product prices, find new ways to reduce their costs (usually through “design improvements”) or simply accept a lower level of profit. Others in the automotive food chain are even less lucky.

For low-income consumers, the high prices for raw automotive materials trigger far worse consequences. For starters, rising raw materials prices have forced some parts makers to the wall; they can’t simply pass on their costs to the manufacturers. (This is what precipitated GM's and Chrysler's recent attempts to sue and seize the assets of many of these faltering firms.) We’re already hearing reports of replacement part shortages due to the American Axle strike. The harder it is to get low-cost replacement parts for your car, the less it’s worth.

Meanwhile, long term, rising commodity prices hit manufacturers hard. How do you justify selling cars whose loss levels are getting worse by the day? This is not an easy question to answer. You can only sell your products at a loss for so long. Whether or not you believe any of the domestic carmakers are on the brink of disaster, the lack of affordable raw materials certainly helps speed these embattled automakers towards bankruptcy.  

Needless to say, that possibility would whack American consumers but good. A bankrupt automotive company has virtually no responsibility to anyone. You want the warranty honored? Too bad. You want parts now? Hold on a sec/minute/month/eternity. While it is certainly true that a bankrupt automaker would continue to do business, the chain of customer responsibility (such as it is) would be severely damaged. And the customer would literally pay the price.

If you think that I'm being alarmist, keep in mind that I've literally seen thousands of Daewoos stuck at auctions– for years on end– because the courts had to decide their rightful owner. Even today, few cars in the market are worth less in their market segment than a Daewoo. All things being equal, there are few events that can hurt a car owner more than bankruptcy (hence Detroit’s unwillingness to consider the nuclear option).

So we’re living in a new world, where old cars are less of a blight on the landscape but car owners and car makers face significant new risks. It’s no wonder Toyota’s heading to Africa for new sources of exotic metals and a GM exec was convicted of commodity related fraud (that cost GM some $80m). In this business, it's no longer the one who owns the gold that rules. It's the one who owns the steel, copper, lead, petrochemicals and lithium. 

Selling indulgences are we? Toyota has made a $20m donation to the Audubon Society, the single largest donation in the conservation society's history. At the same time (coincidence or what?), ToMoCo and AuDoBo are co-launching "TogetherGreen.org." The Car Connection says TogetherGreen programs will have three prongs (devil's trident perhaps?). The first "uses innovation grants to increase measurable land, water, and/or energy conservation." Part two: conservation fellowships. TogetherGreen will train up to 200 environmentalists that can become expert guides, organizers and role models. Part three funds volunteer days, which will be offered at Audubon's network of nationwide community centers, to present hands-on experience with environmental issues." Out of curiosity, what's the bet the Audubon society won't be criticizing Toyota's nine SUVs anytime in the near or distant future?

After Lexus' slow start in Japan, Toyota has announced plans to introduce India to the premium brand within the next two years. To that end, India's Economic Times reports that the flagship Lexus LS sedan and LX SUV will lead the way, followed closely by the RX CUV. Toyota is investing heavily, planning stand-alone Lexus dealerships so that Lexus can "operate from a separate exclusive entity to maintain its niche brand value." As it has in the U.S., Toyota will align Lexus to compete against the usual (German) suspects: BMW, Audi, Mercedes and Porsche. Given the country's burgeoning nouveau riche class, India appears to be a great candidate for a brand with no "real" provenance or heritage. If Tata expands Jaguar/Land Rover distribution to India– and why wouldn't they?– the great tiger will be the scene of some interesting luxury car wars over the next decade.