Yeah, right. That makes perfect sense; for all the common sense reasons you're about to post below. And yet, Fortune's senior editor Alex Taylor Three Sticks offers the possibility within his '08 auto industry preview. "Speculation is building about Cerberus' exit strategy from Chrysler, as well as its timing. Will it try to merge Chrysler with Ford or sell it to another automaker, or go to the public with an IPO?" At least Taylor's on board with TTAC's Chrysler Suicide Watch theme: "Crosstown rivals are watching carefully because a Chrysler in distress could lead to suicidal industry-wide price-cutting." Wow, all three Motown automakers could be jumpers? Now that we didn't consider. While he's at it, Taylor allows himself some xenophobic posthumous projection regarding India's Tata motors assuming control of Jaguar. "Winston Churchill must be spinning in his grave." And speaking of theoretical quotes… "The other day, a GM executive was speculating that the auto industry was sorting itself into two categories: two super-companies, GM and Toyota, with annual production of nine million vehicles each, and all the rest." Alex torches his straw man and concludes "the world is becoming a fluid place." This is news?

The Kentucky Herald Leader reports that pro-union forces have formed "Toyota Owners for Fairness," a pressure group aimed at organizing Toyota's U.S. factories. It is, no doubt, a bizarre alliance. "It's a collaboration between the unions, the environmentalists and people of faith," revealed the Rev. John Rausch, group organizer and director of the Catholic Committee of Appalachia. (In case you were wondering about the tree-hugging portion of the program, "The campaign salutes the company for its environmental efforts but challenges it to hear workers' concerns.") Although the article makes no mention of any UAW financial contribution to the union supporters (or what kind of car Revered Rausch drives), the fact that Toyota Owners for Fairness launched their effort to unionize a Kentucky plant at a downtown Detroit church tells you pretty much all you need to know on that score. Meanwhile, workers at Toyota's Georgetown plant have set-up a rival group. "Truth Finders" recently bought a quarter-page ad in the Leader to refute claims of worker exploitation. Chief Truth Finder Marvin Robbins declined to name his financial backers, but insisted that Toyota had not contributed to the cause. Given that Georgetown has been union-free for some 20 years and the UAW's dwindling power within the industry, Rev. Rausch best pray for some divine intervention. 

Last August, TTAC predicted the Chinese auto makers would start taking steps to edge their joint venture partners out of their market. And so today's International Herald Tribune reports that the Chinese government has "asked automakers to combine to compete with overseas rivals like Toyota and Volkswagen." To that end, China's largest auto maker has just announced that they're buying Nanjing Automotive Group's automotive assembly and parts-making businesses. Shanghai Automotive Industry Corporation (SAIC) currently has joint ventures with GM and VW. Nanjing owns the rights to the MG Rover brand– and is busy dumping their current joint venture with Fiat. There are no known plans to terminate any other joint ventures, but as SAIC strengthens its position in the Chinese auto market, they'll be looking to cut loose their foreign "partners." Count on it. 

Back when Toyota first toppled GM from the worldwide sales charts, The General's General dismissed the historic milestone as no biggie. When the markets growled at Rick Wagoner's ho-hummer, the American CEO eventually declared his intention to defend the company's honor. While it's down to the wire for '07, Toyota is already announcing its intention to snag the sales title in the New Year. According to The New York Times, ToMoCo plans to sell 9.85m vehicles worldwide in 2008. In fact, despite a U.S. economic downturn, Toyota is set to increase American sales by one percent.  So what does the 76-year worldwide sales champ have to say about its own plans for world domination? Nothing. "G.M. has not given a forecast for the number of vehicles it expects to produce or sell in 2008." Just in case you missed the contrast in corporate cultures, Credit Suisse auto analyst Koji Endo reminds us that “These are targets Toyota is giving, not forecasts, and so they are reasonable." Oh, and Toyota also says it will begin mass-producing lithium-ion batteries for its low-emission vehicles in '09. And so it goes.

Curious about the Chinese pickup truck market? China Car Times gives a rundown of what they consider the best-looking pickups offered to the people of the PRC. Their favorite is the Big Diesel God, with styling copped from Chevy and power by Mitusbishi or Toyota. They're also fond of the Great Wall Wingle, which looks more cute-ute than pickup. The Photon SaPu and Zhongxing Grand Tiger round out their round-up. From the looks of it, if the Chinese ever want to launch an attack on the small truck market in the U.S., they already have some pretty good ammo in their arsenal – not to mention some of the coolest model names for trucks since the Chevy LUV (Light Utility Vehicle).

The International Herald Tribune reports when House Speaker Nancy Pelosi sent the energy bill to the Prez for his John Hancock, it was delivered in a Toyota Prius owned by an employee with the Office of the Clerk of the House. Naturally, using a Japanese hybrid to deliver the bill pissed off two Republican representatives from Michigan. Rep. Candice Miller said it was done "just to demonstrate their complete disregard for the domestic auto industry." Rep. Mike Rogers echoed that sentiment, calling it a "slap in the face of every American auto worker." A staffer in Pelosi's office said the two were "merely attempting to distract from the success of the Democratic energy security legislation" and added that 95 House Republicans (fewer than half) supported the bill. He stopped short of saying "nanny-nanny-boo-boo." What I'd like to know is why a paper copy had to be delivered at all. After all, if the Democrats were that keen on conservation, they could have transmitted it electronically.

Ford likes SUVs so much that they build five platforms for ‘em, many of which fight amongst themselves for sales in overlapping segments. Yet the most competitive, the most relevant of Ford’s sport-utilities is also the one no one— not even Ford marketing— seems to know exists: the Taurus X, née Freestyle. Question: if a terrific CUV falls in the sales charts and nobody in Dearborn notices, does it exist? 

Some? I mean, c'mon Mr. Phelan. As a Detroit Free Press columnist, if you're going to proclaim a design renaissance at GM, why go half way? Why just trot out the Buick Enclave, Saturn Aura, Chevy Malibu and Silverado, draped though they are in various advertiser ingratiating COTY awards? What of the Pontiac G6? Saturn Sky? Chevrolet HHR? The General has 51 models spread over eight brands. Or are these four examples a sign of things to come. Apparently so… "The reason the new 'vehicles happened is that GM now has a hyperefficient, product-focused vehicle development program,' said Jim Hall, managing director of 2953 Analytics of Birmingham. GM's vehicle-development system today can stand alongside Toyota and BMW as the best in the industry." While one wonders just how efficient a development system has to be to qualify as "hyperefficient," Phelan identifies the three major changes ensuring that his Big Four aren't flukes. First, "A single executive is responsible for each family of vehicles, usually keeping the job for 10 years." Second, "Each of GM's global engineering centers now concentrates on the kind of vehicles it does best." And third, "The goal for each new vehicle is to be the best in its class, rather than simply hoping to be competitive." Phelan ends his paean to The General by elevating CEO Rick Wagoner, design chief Ed Wellburn and Car Czar Bob Lutz to sainthood. Clearly, the hometown scribe knows how to put the sick in sycophancy.

It’s beginning to look a lot like Christmas; at least in Dearborn. Ford has reinstated merit raises for their white collar workers. Bonuses for its blue collared brigade are under consideration. Ford’s global manufacturing guru Joe Heinrichs figures “it’s important to reward people for doing the right thing.” Which is… three straight quarters of besting Wall Street’s paltry projections and slowing the Way Fordward’s cash burn. With the long anticipated sale of Jaguar and Land Rover only days away, it would seem that Mulally’s machine is running smoothly. Yes Virginia, there is a Santa Claus.

No question: FoMoCo’s financial outlook is festively plump compared to last year’s lump of coal. That’s mainly due to the fact that Alan Mulally’s minions have slashed and burned their way through the Blue Oval’s bloated bureaucracy. After paying off the United Auto Workers, they’ve taken an axe to Ford’s chronic overproduction, shuttering plants, eliminating shifts and generally cleaning house.

Bottom line: the Blue Oval’s downsized their cash burn from an estimated $17b per year, down to a measly $12b to $14b per year.

To celebrate this turn of events (i.e. better balance their books and lighten a debt load that makes Paraguay look flush), Ford recently spawned 62m more shares of common stock. And the stock found buyers too, thanks to the ongoing belief that you (and by that I mean Ford) CAN cut your way to prosperity. Why all Ford has to do to turn its ass around is… right-size the company to the point where production meets demand!

Only demand for Ford products shows no signs of recovery. The truth is, Ford’s “product lead” turnaround is still stuck in neutral. Indeed, the Blue Oval Boyz market share continues to erode. Reviewing their latest internal report card, Ford’s number crunchers cringed when even their employer failed to meet its modest market share projections: 13 percent. Currently (through November) Ford reps just 12.4 percent of the North American pie, and the slice is getting smaller by the day.

Not surprisingly, fingers were pointed outside the Glass House, at FBOC (Factors Beyond our Control). The usual suspects were all present and accounted for: the “faster than expected” market shift from SUVs and trucks to small cars and crossovers; the rise in fuel prices and the fall in the economy as a result of the sub-prime mortgage crisis. Absent, of course, was any acknowledgement that, at this point, they should know better.

Ford simply ignored the North American customer. As analysts (and TTAC) have pointed out on numerous occasions, FoMoCo’s mélange of motorized product is truck heavy. Currently, the Ford brand offers customers six car models and nine trucks. Mercury’s ratio is better at 4:3 (cars to trucks). Lincoln, FoMoCo’s luxury marque, is more vulnerable, with only two car platforms and three trucks.

With the demise of the Panther platform (Crown Victoria, Mercury Marquis, Lincoln Town Car), three car models will disappear from the Ford roster, resulting in an even heavier truck-based portfolio. The Ford Focus is FoMoCo’s smallest model, its only American economy car. The 2007 TTAC Ten Worst nominee’s moving slightly more units than the vine-withered model it replaced. The automaker’s next next big thing, the Ford Flex, is just that: another big “thing.”

Bottom line: through November, FoMoCo’s car sales are already down over 24 percent from last year. So even the few Ford passenger cars available aren’t winning over consumers.

Auto analysts Robert Barry (Goldman, Sachs & Co) and Rod Lache (Deutsche Bank Securities Inc.) both reckon Ford’s decade long decline is nowhere near done. Not unlike Toyota, Honda and Nissan, Barry realizes that “demand growth will be greatest for smaller cars” and that without them, Ford’s market share is simply “unsustainable.”

Worse, Barry also contends that Ford’s current production-related savings are fleeting at best.  Because of increasing regulatory demands (i.e. new Corporate Average Fuel Economy standards), Ford will need to spend more on each and every vehicle produced. In his analysis Barry figures the new UAW contract will save Ford about $4b in “structural cost reductions.” The automaker will need that money, and then some, to the tune of $11.9b, just to keep up.

The Detroit News reports that Ford Americas President, Mark Fields expects the 2007 US light vehicle market to hit its lowest mark in about a decade (16.4m units). Fields also expects that number to fall further next year, to around 15.3m units. Figuring 12.5 percent market share, that means Ford will move around 1,912,500 units. 

Of course this all depends on an economy that, the Federal Reserve figures, is poised to continue to weaken. “Modest” Mark said Ford is “planning conservatively.” They’ll “look at things on a month-to-month basis” and “take appropriate actions if things go worse than expected.”

Bottom line: Happy New Year!

Even as the Prez picks up his pens to sign the new Energy Bill into law, the automakers are rallying around the cause. While the cynical amongst you might suggest that their support indicates that the bill's riddled with loopholes, we couldn't possibly comment. Chrysler's (nee Toyota's) Jim Press had no such reluctance. He told MSNBC "We now know what the rules are of the game. [Translation: We manipulated the legislation as much as we could.] Each manufacturer now will be able to play its hand in its unique way. [We'll game the rules to the max.] We're in the best position to marry technology and not make people make sacrifices or compromises on the product they want. [We're going to continue to build huge trucks, CAFE be damned!]" Rick Wagoner responded with Generic Press Statement #31: "We will focus our engineering and technical resources to attain these standards, and we remain hard at work applying the innovation and developing the advanced technologies that will power tomorrow's cars and trucks." Toyota's Jim Lentz just said they'll expand their range of hybrids. "We're a hybrid company." Uh huh. A hybrid company that makes a fortune off of gas-sucking trucks and SUVs. It's nice to know even as the rules change, it'll be business as usual.

Motor Trend (MT) has named the Tundra their Truck of the Year. Yes, "The new Toyota Tundra is now ready to take on any American-made pickup truck– on all levels." To get the gong, an aspiring pickup had to be new or redesigned in the 12 months before Jan. 1, 2008. So the only "American-made pickup trucks" that qualified were the heavy-duty versions of the Silverado, Sierra and F-series. Hang on; how come the new Tundra, introduced as an '07 model, qualifies? It's about as much as mystery as why MT considers "significance" one of their three judging criteria. Anyway, in their official reveal, MT spends a paragraph sloughing off the Tundra's well-publicized recalls and quality problems. "Our guess is many of these stories spread like wildfire, given the lightning-rod effect this new truck is having with enthusiasts and the speed with which an Internet item can travel." And of the latest recall for a soft joint in the rear driveshaft, they add, "(EDITOR'S NOTE: Testing, judging, and story for the February 2008 issue of Motor Trend were completed and printed before the latest safety recall involving 15,600 2007 Tundras to correct a potential driveshaft issue)" It's amazing how much spin a generous advertising budget can buy.

As we reported yesterday, Mercedes is working on anti-driver fatigue gizmology. Yahoo! Canada reports that Toyota has decided that the world needs more 'lerts. ToMoCo's recruiting the research team that developed Nintendo's "brain training" games to help them ride herd on driver alertness, specifically as it involves the elderly. Their wakeupmobile concept will monitor the helmsman's "brain activity, automatic nerve reflexes, attentiveness and other mental and physical conditions" and then stimulate the drowsy driver through a variety of means– including cranking-up the AC "to invigorate the driver's brain." Toyota hopes to put some of the systems they develop into use by 2015 to 2020. Nissan has also expressed interest in research in this area, but has made no decision to pursue it. No word from Buick who's rumored to be surveying their remaining customers to determine if A) they're still alive and B) they can understand the system's advantages.

Car bombs are the poor man's nuclear weapon. The devastation unleashed by this relatively inexpensive explosive delivery system– to human life, political discourse and military strategy– is staggering, in both scope and scale. Car bombs are, in a word, horrific. So is it alright to joke about them? You may recall the UK viral ad that showed a car bomber blowing himself up in a VW Polo, which contained the blast ("Polo. Small but tough"). And now spoof.com takes it a step further: "Toyota replaces Ford as world's #2 car-bomb manufacturer." The author jests that "Mulally then announced Ford had reworked its Explorer SUV to accomodate [sic] bombs and renamed it the 'Exploder'. [By changing only one letter, Ford was able to save money by re-using slightly modified Explorer nameplates.] But Iraqi insurgent analysts ridiculed the Exploder as just repackaged junk: 'Changing the 'R' to a 'D' – they think that's fooling anyone? That thing doesn't blow up any better than before.'" From there, "websmuggler" sails a LOT closer to the wind: "Meanwhile Toyota stunned the industry by announcing the first vehicle specifically DESIGNED as a car-bomb. Named the Toyota Blast, it features seats easily removed to accomodate [sic] more explosives, 35% more window area than competitors to assure more flying glass shards, a high-capacity gas tank designed to quickly rupture, and controls which arm and detonate the explosives with one touch of a button. Options include having the bombs pre-installed at the factory, with the customer's choice of TNT, napalm or nitroglycerine." Are you OK with this?

The prolonged wait for the Chevrolet Volt reminds me uncomfortably of waiting for the Chevrolet Vega to appear. For GM’s sake, the outcome had better be radically different. Because no one single vehicle did more damage to GM then the highly-hyped Vega.

Beginning in 1968, three years before the star-crossed Vega finally landed, GM cranked up a huge publicity campaign for its coming “import killer,” code named XP-887. Every month in Popular Science, I read of the miraculous XP-887, accompanied by spy sketches. This huge PR build-up was unprecedented. Previously, new cars were kept under wraps as long as possible. GM was raising the expectations of the whole nation.

The Vega became a cause of national interest: if Americans could beat the Russians to the moon, GM could damn well beat back the imports.

Kinda like the new Chevy Volt.

When I finally saw photos, I began to salivate. The Vega was as cute as a button: those sparkly bright eyes, that Ferrariesque egg-crate grille, the sleek lines on the fastback coupe and that adorable little wagon. Never mind that the Vega was essentially a baby Camaro, with a low roofline that made it cramped and impractical.

Not unlike the Volt’s squished roof.

My enthusiasm inspired a friend to become a Vega beta-tester. Since the baby Chevy’s prices were rather lofty, he settled for a base two-door sedan. When he showed up with it, I experienced my first GM cold shower; actually, it was more like being waterboarded.

At a time when the imports were only selling fully equipped models, the base Vega made a pole-dancing stripper look dressed for church. Unlike the proto-bling Vegas in the ads, his car had no exterior trim, ill-fitting taxi-cab rubber flooring and grim wall-to-wall hard plastic. There wasn’t even a door on the glove box. I had never seen anything like it before because nobody had built an interior like this before.

The Vega forced GM to confront a cruel fact that it still hasn’t solved: it doesn’t know how to manufacture small cars profitably. Originally intended to compete head-on with the imports, higher production costs forced GM to price the Vega some 10 percent higher. They intended to justify that premium with an extra-well-equipped small car. But in a last-ditch effort in the losing battle with profitability, they made the ad-friendly “custom” interior and exterior pieces optional.

Kinda like GM’s plan to sell the Volt without a battery.

We opened the Vega’s hood and started the engine. An auditory form of CIA-approved torture ensued. Not only did the strangely shaped long-stroke engine “look like it had come off a 1920’s farm tractor” (John DeLorean), it sounded and shook like one too. As fond as I am of old Farmalls, this was nothing like my high school buddy’s zippy and smooth Datsun 510 engine.

And what did GM’s moon-shot program offer in the transmission department? The two-speed Powerglide first saw the light of day in 1949. It felt like half of the engine’s 80 horsepower were somehow lost in translation to the rear wheels.

Unfortunately, the standard three-speed stick was just as much a throwback to the fifties, and had such widely-spaced ratios that Car & Driver said it “feels more like a six-speed with first, third and fifth gears missing.” The fact that the Vega handled well (on glass-smooth pavement) only made the power-train that much more frustrating.

But hope springs eternal. Right from the beginning, Chevy was talking up a performance version being developed with Cosworth. They promised a 180hp Vega was “just around the corner.” When the Cosworth Vega arrived four years later, it had all of 120hp, accelerated from zero to 60mph in nine seconds, and cost twice as much as a regular Vega. Not surprisingly, only 3500 were sold. 

My friend went on to endure a number of the Vega engine’s pathological suicidal tendencies: carburetor fires, overheating, distorted blocks, oil consumption. When terminal rust set in after three years, he dumped it for peanuts and bought a Toyota.

Why was the Vega so flawed? It wasn’t actually developed by Chevrolet at all, who might (possibly) have had a (slightly) better idea of what import buyers wanted. GM gave the XP-887 job to a lofty corporate engineering group, and forced the flawed finished product on a reluctant John DeLorean, then President of Chevrolet. On his engineers’ first drive in a prototype, the whole front of the car literally fell off after eight miles.

Chevrolet had already developed a conventional small-car engine, but the GM corporate engineers knew better, and risked all on the world’s first aluminum block without steel cylinder liners.

Kinda like the Volt’s lithium-ion batteries.

But I’ve put my worries aside; companies learn from their mistakes, and lightning never strikes twice in the same place, right?

More than a few industry pundits have taken to calling Hyundai "the next Toyota." The spin: Hyundai is a formidable low-cost automaker whose high quality products are stealing side dishes from Toyota's table, eying the Japanese automaker's main course. As our Steven Lang has pointed out, the Sonata's lackluster U.S. sales help partially put paid to that theory. And now Chosun explodes the myth entirely. The South Korean newspaper reports that the Federation of Korean Industries has discovered that Korea's largest carmaker produced 29.6 cars per worker last year, 57 percent fewer than Toyota's 68.9 cars per worker. "Hyundai Motor’s sales and operating profit per worker were also no more than 40.8 and 22.2 percent of those of Toyota. The Korean company's productivity was worse than that of six other international automakers. Compared to the assembly productivity of 21.1 to 23.2 hours per vehicle by Ford, Honda, General Motors and Toyota, Hyundai and Kia recorded 31.1 and 37.5 hours, respectively." And here's the kicker: "Hyundai paid its workers more than Toyota, with an annual average salary per worker of W57m (US$1=W934) compared to Toyota's W55 million." 

UPDATE This just in from Deep Throat: "Methinks the Korean reporting on Hyundai is wrong. There is no way the production per worker is half that of Toyota and they get paid more. They’d be bankrupt. Also, IIRC, the Nummi plant in NorCal produces something like 400,000 units per year on 4,500 workers… but if you add sales/admin/corp staff to that, I can believe somewhere around 70 units/worker/year. And Toyota/Ford/GM take about 30+ manhours per unit of production, not in the low 20 hour range."