SUVs are evil. Evil I tell you! They represent all that’s bad about America: greed, sloth, gluttony, selfishness, arrogance and environmental indifference. They gargle gas, warm the planet and knock poor little hybrids into next week. More importantly, SUVs cost a fortune to feed and depreciate like packet of condoms. So what’s an SUV-intensive manufacturer like GM to do? Why make an SUV that doesn’t do all that hard-core SUV stuff, spiffy-it-up a bit, and sell it to all the people who love SUVs but hate SUVs. Ladies and gentlemen, the GMC Acadia.

When the President of Toyota's NA Ops tells his dealers that the good times "are temporarily on hiatus," you know the U.S. new car market is in BIG trouble. The AP [via the International Herald Tribune] paints a bleak picture: "Jim Lentz told the American International Automobile Dealers Association annual meeting that even strong Toyota dealers are reporting customer traffic down as much as 60 percent this year." Like his opposite numbers in Detroit, Lentz also believes– or at least says he believes– that the U.S. new car market will recover towards the fourth financial quarter, finishing the year at some 16m units. He also predicted that Toyota sales will rise regardless, continuing to buck the declining market. (Toyota sales rose three percent last year, despite a 2.5 percent decline in U.S. new car sales.) Thinking longer term, as Toyota tends to do, Lentz predicted good times ahead. "It is possible for the auto industry to hit 18 million sales annually sometime later in the next decade." 

GM is expected to announce greater-than-predicted fourth-quarter losses for their North American unit later today. While the exact figures aren't available yet, experts predict GM will report a loss of 64 cents a share, compared with earning 32 cents a share in the same quarter of 2006. Bloomberg cites "two people familiar with the [fourth quarter] results" who say the losses were due in large part to an upsurge in incentives in the fourth quarter as they tried to keep up with Toyota. Credit Suisse analyst Chris Ceraso concurs. "Higher incentive spending outweighed better than expected volume and mix" in GM's North American operation. They seemed to forget that Toyota had plenty cash on hand to fund the average $6.4k rebates on Tundras while they could ill-afford the average $6k they slapped on the hoods of their pickups to keep them moving. The exact damage to GM's bottom line will be announced later today. Watch this space.

UPDATE: Well, folks, it was far worse than anyone expected. MSNBC reports GM had the largest annual loss ever reported by an auto company: $38.7 billion; GM's previous record was $23.2b in 1992. In the fourth quarter alone, they lost $772m. Part of the loss was from their share of GMAC, which cost them $1.1b. GM also announced today they're following Ford's lead and offering buyouts to all 74k of their hourly UAW workers so they can replace them with lower-paid workers under the new contract.  

The Dallas Morning News reports the Lone Star State is spending $100m to get gas-guzzling, smog-spewing old cars off the road in the metro DFW and Houston areas. The program, which began taking applications last December, provides vouchers to low-income families who have cars that are at least 10 years old. The vouchers can be used as a down payment on a new or late-model used car ($3K voucher) or up to one-year-old hybrid ($3.5K) at dealers who participate in the "Air Check Texas" program. It's a pretty popular program, as you can imagine. Freeman Toyota has sold 80 cars to voucher holders so far, and Lone Star Chrysler-Plymouth-Jeep has 50 sales completed or pending, most of them used car sales. The program is expected to exhaust its funds for this fiscal year by summer, but there are already funds set aside for FY09. Justifiable environmental intervention or a greenwashed subsidy for local car dealers? We report, you kvetch.

The National Automobile Dealers Association (NADA) shindig in The City by the Bay is all abuzz about domestic manufacturers' "dealer consolidation." As we've been saying for the last two eons, The Big 2.8's obese dealer network (GM still has over 6k franchisees) is a millstone around their collective neck, forcing them to spread their corporate resources paper thin. Now that The Big 2.8 are supposedly addressing the problem by "combining sales channels" and "helping dealers merge," it should be noted that the vast majority of the "credit" for lowered domestic dealership counts goes to… bankruptcy. The simple truth is that hundreds and hundreds of The Big 2.8's dealers are failing, closing and disappearing. Meanwhile, what "carrot" can the automakers offer for consolidation? Cash? Hot models? Er, no. Ah, but Chrysler's found a stick! Automotive News [AN, sub] reveals the hidden hand behind "project Genesis:" "Chrysler LLC plans to prune its product lineup to the point that only dealers carrying all three of its brands — Chrysler, Dodge and Jeep — will have a full vehicle line." Ex-Toyota Prez, current Chrysler Veep Jim Press outlined the threat. "If (dealer) consolidation doesn't occur before the product goes away, it will be more difficult for dealers to get what they want." Is that a threat? Is that legal? Inquiring minds want to know.

The Wall Street Journal reports that Toyota's captive finance company is increasing the number of 84-month auto loans on its books. "These loans, which carry slightly higher rates than 72-month deals, have risen to represent 4% of all cars Toyota Financial Services lends money on." (This they call writing?) The Journal puts some numbers to that "slightly higher" aside (from 6.9% to 7.59% for 84-month loans, compared with 5.85% to 6.84% for 72-month financing) and ascribes the move to a general desire by automakers to avoid piling incentives on their new metal during the current sales slowdown. Although GM may face blowback for its "anyone with a pulse" zero percent financing deals, Toyota Financial Services is also on the hook for billions. An unnamed ToMoCo spokesmouth told the WSJ that her employer writes loans for about three-quarters of the cars financed at U.S. Toyota dealers, accounting for about 50 percent of total sales. She claimed the seven-year loans are given only to customers with top credit. Yes, well, is this the start of a trend? GMAC Financial Services says 84-month loans constitute a tiny portion of their car biz, and Ford Motor Co.'s credit arm says it "isn't aggressively offering them." "We don't like these loans," Ford Motor Credit Chief Executive Michael Bannister told the Journal. We shall see…

Ford’s marketers often appear to live in a sort of surrealist parallel universe. How else to explain their enlistment of Kermit, the self-effacing, hand-operated amphibian, to pitch the Ford Escape Hybrid? This SUV has the makings of a game-changing, ass-kicking product. It’s a genuine full hybrid, with components licensed from Toyota.  It’s sized, styled and priced to the mainstream’s liking. Yet, saleswise, the hybrid Escape is croaking. Methinks Ford’s spokesfrog hasn’t given the Escape Hybrid the marketing momentum it deserves.

You know, we give Autoblog a lot of grief for being the auto industry's bitch. And deservedly so. But every now and then the website of record gets a sudden rush of testosterone that makes us proud to share the autoblogosphere. Today's Detroit Free Press carries a boilerplate auto show story involving one former Toyota Prez (Jim Press) and one rear wheel-drive muscle car (Dodge Challenger SRT8). Price, waiting list, Mustang throwdown ("We'd rather run like a thoroughbred than ride like a pony"), yada yada yada. And then Chrysler Vice Chairman Jim Press has his say. And then Autoblog's Damon Lavrinc takes the Chrysler exec to the woodshed. "Press expounded on the Challenger's virtues, saying that the SRT8 has a higher top speed (170 mph) than BMW's M5. Kind of a misnomer considering that the M5's speed limiter keeps the BMW sedan below 155 mph – unleashed, it has the potential of doing 205 mph. The Freep also quoted Press as saying that the Challenger has more torque than the Porsche 911 Turbo. Ummm… no. The 6.1-liter Hemi V8 produces 420 lb.-ft. of twist compared to the 911 Turbo's 460 lb.-ft….'When you sit inside, it makes you feel younger and richer than you are.' Younger? Maybe. Richer? Not quite Mr. Press. We've seen the interior and it's hardly what you'd call luxurious, let alone exciting." You go boy!

We repeat: conflict of interest renders Intellichoice's data inherently suspect. So, Bloomberg [via Boston.com] reports that "General Motors Corp., the biggest US automaker, gained ground on Toyota Motor Corp. in an annual survey of ownership costs including measures such as sticker price and resale value. GM led in three vehicle categories, up from one last year, while Toyota again won four of the eight total awards." While we're disappointed that Bloomberg takes Intellichoice's choices at face value, their cheerleading conclusion is especially galling (to this gall bladder-less cynic). "The results lend credence to GM's goal of improving quality and boosting resale values by curbing incentive spending and sales to rental-car companies." This despite the fact that the Corvette was the only GM passenger car to receive a nod. Which didn't stop Intellichoice's spinmeister from bolstering Bloomberg's BS. "Word is starting to get out that if you buy a Chevy, you're not destined for troubles the way you were 10 years ago." Here are the full "results."

Judging by list prices, ignoring the presence or absence of any other options and any thoughts of political correctness, which U.S.-spec vehicle offers the most horsepower per dollar? I always assumed it was the 300 horsepower Ford Mustang GT, which clocks in at about $26k. Nope. Its $/hp ratio is $86 per pony. It's a good buy, but not the bang-for-the-buck champ. Remember: lowest $/hp wins.

Pontiac G8 – 360 horses – $83/hp
Dodge Magnum SRT8 – 425 horses – $89/hp
Dodge Caliber SRT4 – 280 horses – $82/hp
Chevy HHR SS – 260 horses – $88/hp
Shelby GT500 – 500 hp – $86/hp

But it's when you get into the trucks that the money-power ratio comes into focus.

Nissan Titan – 317 horses – $82/hp
Toyota Tundra – 381 horses – $81/hp

Yup, the true power mongers however are pickup trucks. The Mopar option is the Dodge Ram 1500, which brings you a 340 horsepower Hemi for only $25k– a fantastic ratio of $73/hp. But the crown goes to… the Ford F250 Super Duty, equipped with a 362-horse 6.8-liter V10. Listing at $24,175, that's a $67/hp combo. Screw the Dodge Challenger ($89/hp) rebirth. The muscle car champ is still a Ford truck.

Even before 2008 arrived, industry experts were predicting a bad, bad thing. So far, they haven't been disappointed. While January tends to be a low sales month, as everyone tries to recover from holiday overindulgence, this January was worse than expected. There were a few inexplicable bright spots (*cough* channel stuffing *cough* dealer fleet sales *cough*). Sales of the Dodge Caliber (up 25.5 percent over last January), Ford Focus (up 44.4 percent), Buick LaCrosse (up 69.3 percent) and Chevy Cobalt (up 32.9 percent) all shot up. But these four-wheeled anomalies weren't enough to salvage the month. Let's break it down… 

You'll notice we've made a few changes in the models we're tracking. Last year, we didn't include Honda because they didn't offer models in all our categories. This year we said "what the Hell" and added the Accord and Pilot to the passenger car and CUV categories. With a new crop of CUVs available, we dropped the hoary Chevrolet Equinox and DNR Chrysler Pacifica and added the ascendant GMC Acadia. We'd like to track GM's hybrid sales but, for some reason, they don't break them out of the totals. So the Toyota Prius will be our hybrid bellwether.

Pickup Trucks

As gas prices keep going up, pickup sales keep going down. The Chevrolet Silverado was down 5.9 percent from last January. The lame duck Ford F-Series continued its downward trend, ending the month 8.4 percent lower than the same month in 07. The lame lamb Dodge Ram plummeted 18.4%. The Toyota Tundra showed a 91 percent increase, but that's because the previous model was winding down in January last year. 

Passenger Cars

Instead of the Chevrolet Impala, this year we'll be tracking the new Malibu. Initial sales numbers are strong; sales are 57.9 percent above last January. Chrysler's 300 continues on slippin', slippin'; shedding 9.7 percent from last year's total. Ford Fusion sales were uncharacteristically low, dropping 12.8 percent. Camry held steady, showing a 0.4 percent increase. The Honda Accord's redesign hasn't helped it much so far; sales are down 6.8 percent from the same month last year. 

Truck-based SUVs

The mass exodus from massive SUVs continues. Chevrolet Tahoe sales dropped 12.1% from last January. The Ford Explorer ended the month 18.7 percent lower. The Dodge Durango took it on the chin, tumbling a jaw-dropping 32.8 percent. Instead of tracking 4Runner this year, we'll see if Toyota's redesign has any effect on Sequoia's numbers. For now it seems to be working. The Sequoia finished the month 15.5 percent ahead of last January.

CUVs

The current CUV poster child, the GMC Acadia, is up 335 percent from last January. That's not quite as startling as it seems. The model was introduced in January '07; production had just begun. The Ford Edge has edged the Ford Escape out of our charts. The Edge is up 94.9 percent for the same reason as Acadia. Toyota recently redesigned the Highlander, so we'll follow it instead of RAV-4. As the newish Highlander was up 19.4 percent from last January, the redesign was a good thing. Will it have legs? Honda's Pilot may not. It makes a less-than-spectacular debut on our charts, finishing the month 10.7 percent below last year's sales totals.

Prius

Is the hybrid boom going to go bust? If you assume that the Prius IS the hybrid boom– a fair assumption considering that the gas-electric sedan has no real sales competition– we're still booming. The Prius gained a whopping 37.1 percent over last January's totals. Whether sales will continue to grow remains to be seen, but this is one of the few models that's helped by rising gas prices. 

Total Sales

Anyone who looked at the business page or any automotive publication knows GM finished in the black in what was an otherwise dismal month. GM's sales were up 2.6 percent over last January's, but it must be remembered that last January was horrific for The General. Ford was down 3.9 percent and Toyota and Honda were both down 2.3 percent. Chrysler really took another head shot, starting the year 12.1 percent below last year.  

The Future

GM and Ford analysts have pretty much written off financial quarters one through three. And for good reasons: a moribund housing market killing consumer confidence, the possibility of widespread car loan defaults, rising subprime interest rates tightening consumer credit, bankrupt suppliers, rising production costs, rising gas prices and changing markets. Now more than ever, survival of the fittest are the industry watchwords. And watch we will. 

Just as TTAC's Samir Syed was getting himself all hot and bothered about the car price differential between new cars in Canada and the U.S., Toyota ran him a nice cold bath. The automaker is slashing its Canadian prices to reflect what Stephen Beatty, managing director of Toyota Canada, calls the 'new normal.' Driving.ca reports that ToMoCo CA's cutting the manufacturer's suggested retail price (msrp) on 16 Toyota and Lexus models by a range of $750 and $8,100. Some examples (all in Canadian dollars): a Yaris hatchback drops five per cent ($750) to $13,165; the RAV4  falls 6.8 per cent ($2,000) to $27,400; the Tacoma pickup truck drops 10 per cen ($2,290) to $20,470; and the Lexus IS sports car decreases 13 per cent ($4,650) to $31,900. Beatty denies that a two percent drop in Toyota sales spurred the move. "This isn't about weakness in the marketplace… There is a difference structurally today in the marketplace from where we were last year." Oh, do the math and the RAV4 is still more expensive in Canada than the U.S. I guess the new normal is the same old you-know-what, only less. 

For four months, the Canadian dollar has been flirting with U.S. dollar parity. And yet the same vehicles cost more north of the border than south. As America’s NAFTA neighbor imports more and more American cars, basic theory holds that automakers would eventually cut Canadian prices to eliminate arbitrage. “Eventually” hasn’t happened. Just as it was back in October 2007, the Lincoln Navigator is still $28k cheaper in the U.S. than Canada. Why?

The answer probably lies in that great evil that has ruined many naïve economists’ dreams since man began to theorize: asymmetrical information. If we assume Canadians are rational buyers who maximize their well-being, we must conclude that they simply don’t know how easy it is to import a vehicle, or that many vehicle warranties still apply after import, or that a price difference even exists at all. So let’s call it what it really is: ignorance.

Seeking some anecdotal evidence, I probed my immense social circle on the possibility of importing a car. Most don’t even realize it’s possible. One claims there is no price difference. One claims they can’t be imported (he’s never been to www.riv.ca). Another friend claims he’d have to pay huge duties (none on vehicles built in the NAFTA zone, 6.1% on others).

And then there’s the warranty—or the perceived lack thereof. Notwithstanding that the Toyota brands (Lexus, Scion, Toyota, Subaru) all honor U.S. warranties for non-residents, the savings on an import can easily exceed the expected value of warranty repairs. It’s a medley of counter-arguments that make as much sense as Star Trek technobabble; which is to say, none at all.

The automakers, predictably, are reacting in a manner that highlights the self-imposed captivity of the Canadian market. BMW and Mercedes USA have retained the decision to allow exports from the U.S. on a car-by-car basis, forgoing the Canadian legal process for approvals en masse.

Porsche has announced a “price-matching cut” on some of its Canadian models. Cut, yes. Price match, no. A quick look at the actual numbers reveals that the 2008 base Cayenne now costs Canadians C$55,200, down from C$60,100 in 2007. That seems like screaming deal– until you discover it’s still about $7k more than what Americans pay for the exact same vehicle.

Other manufacturers played legal games. Honda, Subaru, Toyota and General Motors all refused to certify that their 2008 USDM models were equipped with immobilizers, making them illegal in Canada. In a delicious irony, a 2008 Honda Civic built in Ontario and exported to the U.S. could not, for a few months, be repatriated and legally plated in Canada. As “illegal” cars piled up in driveways and border depots, manufacturers eventually relented and gave their blessing to Transport Canada. The latest RIV.ca update includes all of Honda’s 2008 models.

Honda didn’t stop there. Last fall, Honda Canada launched an insidious marketing campaign that highlighted differences in American and Canadian Hondas, noting that Canadian Hondas are better prepared for the rigors of Canadian winters. "The vehicles that are produced for Honda Canada are supposed to be sold in Canada to Canadian buyers," said Art Garner, public relations manager for American Honda Motor Co, at the time.

Needless to say, Upstate New York, Minnesota, Maine and New Hampshire all are cursed with winters that easily match anything experienced by the 95 percent of Canadians who live within 100km of the U.S. border.

Faced with unjustifiable price differences, the apologists eventually came out of the woodworks. Consider David Booth, of the National Post, who recently advanced the idea that having Canadian prices pegged to fluctuations in the U.S. dollar is not practical due to currency volatility.

Bollocks! The Canadian dollar’s movements have been quite predictable since January 2004: a slow, steady rise from about $0.67 U.S. to $1.00 US today. The average model life of a car is about five years. Since 2004, many manufacturers have had ample time to revise Canadian pricing on newly-introduced models. This, when the trend was obvious to all but the most financially disinclined.

In fact, when the dollar hit its historic low of $0.6179 U.S. back in January 2002, the Navigator I mentioned at the beginning of this editorial was only about $2k cheaper in Canada. Put another way, the only time the Canadian dollar sank low enough to bring Canadians to the economic point of indifference for a Navigator was when it was in the biggest slump it has known since… wait for it.. 1858! Where’s the unpredictability in that?

Canadians imported over 137k vehicles in 2007. It wasn’t enough to “readjust” prices. As long as Canadians do not force equalizing adjustments to prices, automakers will be happy to trot out shady marketing and legal mumbo-jumbo in the pursuit of profits. In the meantime, captive Canadians will get the prices they deserve.

According to the LA Times, "Mayor Antonio Villaraigosa wants to eliminate most of the 229 vehicles in the city's executive motor pool, as well as cars from other fleets, to help close a $155-million shortfall." The Mayor's proposal would take 93 of the City Council's 108 cars off the public payroll. Redefining chutzpah and violating the borders of plausibility, Council members say the move would hurt LA's air quality; their city-financed wheels are low emissions vehicles, while their personal wheels are gas-guzzling SUVs and suchlike. So it's all for the children? Well… City Controller Laura Chick, a former council member, said elected leaders use the cars to entice talented deputies who are in demand around City Hall. "It's become a traditional perk," said Chick, who would get to keep her 2004 Toyota Prius Hybrid under the mayor's plan. The Times says the Mayor and the Council will reach a compromise on the matter. Meanwhile, the LA Police run 1,105 take-home cars. A debate for another time? Count on it. 

You may recall that GM sold its stake in Subaru to… Toyota. Last spring's union between the two Japanese automakers is about to bear fruit. Motor Trend reveals that one of the first toys out of the Tubaru toy box will be a latter day reincarnation of the Toyota Celica. The new sports coupe will arrive both as a lower-priced rear-wheel-drive base model and a full-bore AWD model, complete with the Impreza STi's 300hp engine. The new Toybaru will be offered in two flavors: two-door coupe or three-door hatch. To keep the price duo-brand-compliant, the Subota will be a high-volume model; you can expect to see it in a number of markets including the U.S. GM may rue the day it threw Subie's shares into its cash conflagration.