When GM was lobbying for a federal bailout back in the Fall and Winter of 2008-09, desperate times called for desperate measures. Unable to explain why 30+ years of decline didn’t open The General’s corporate eyes to the need for change back when it could still afford it, pro-bailout agitators reached for the most divisive, debate-squelching justifications for a billion-dollar handout they could find. Whether that meant accusing opposition of weakening national security, ingratitude towards the outcome of WWII, racism, classism or even more racism, GM’s pro-bailout campaign left no wedge issue or leverageable political identity untouched. And man, are old habits hard to kick. The Detroit News reports that:

General Motors Co. is making a pulpit pit stop today as part of its accelerating quest to change perceptions among buyers, boost market share and reach new customers — particularly minorities.

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People do the right thing, unless money and power is involved. From the highest paid executives to the lowest ranking newbie, money and power is a motivator. Those in positions of accountability are held to a higher standard, and post-bailout Detroit is not immune to criticism. But in an act of corporate cheerleading, Pete Mateja’s Internet flamebait at Automotive News [sub] titled “Detroit had lousy management — and other myths that need debunking” shows how the “experts” got it wrong.

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While the autoblogosphere frets bout whether BMW drivers can tell which wheels drive their cars, the real news in the BMW-goes-FWD storyline is the impact that the sea change in brand strategy is expected to have on volume. Automotive News [sub] reports that BMW is developing a new family of modular gas and diesel engines, which are intended “primarily for BMW’s new front-wheel-drive architecture, but the powerplants also will be used in the automaker’s rear-wheel-drive cars,” according to CEO Norbert Reithofer. And the volume at which this new family of three, four and six-cylinder engines will be produced is one of the early indications of where BMW is going with its FWD expansion. Today, BMW sells just under 1.3m vehicles worldwide. That’s fewer cars than will be powered by this new family of engines alone, which Reithofer says will motivate 1.5m vehicles worldwide. Considering BMW’s goal is to sell 2m vehicles of all its brands by 2020, it’s clear that much of that growth will be made possible by new FWD-inclusive drivetrain technology.
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Statistically speaking, it’s a little early to be ragging on the baby boomers. In addition to numerical advantages, the boomers also haven’t slipped fully into retirement, meaning mainstream culture will be stuck for a little longer in the era of unrepentantly rosy nostalgia. And though the pasturing of America’s second-greatest-by-default generation will be ruinous for little things like government entitlement programs, the benefits to important stuff like car design will be profound. Unlike subsequent generations, the baby boomers still had the privilege of living during the golden age of the automobile, a time before Detroit’s decline, the massive government regulation of safety and emission standards, and the general blandifying of the car. As a result, boomers bring a bizarrely retro-sensibility to the modern car market, not just for restored classics, and retro-muscle cars, but for the vehicles that brought an end to the era of Detroit Baroque. Which is where things get interesting.

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Carlos Ghosn was in India on Tuesday, juggling a lot of eggs and covering a lot of bases. The official reason for his visit was the opening of the new Renault-Nissan plant in Chennai, but Ghosn’s arrival set off a flurry of R-N related news in the Indian press.

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China has become a world automobile producing and consuming power, but it should also be noted that the industry still lacks core technology and has weak innovative capabilities… This creates hidden dangers for public safety

The closest thing Toyota has given to an explicit accounting of its unintended acceleration woes is the admission that rapid growth detracted from the company’s previously unquestioned commitment to quality. With the Chinese auto market growing even faster than Toyota was, the Chinese Central government is anxious to prevent such nasty side-effects of rapid volume growth from manifesting themselves in the domestic auto industry. And well it should be: with Chinese automakers like BYD poised to launch overseas sales campaigns, the Chinese auto industry is at a crucial stage in developing its international image. China’s Ministry of Information and Technology has released a statement [via DetNews] urging its domestic automakers to heed Toyota’s example, and adopt “new technology, new techniques, new equipment and new materials” to master the balance between profit and quality. And hopefully move past the image of hand-assembled batteries and carbon-copy design while they’re at it. Meanwhile, Toyota is feeling the hurt. Stung by calls by the government to compensate Chinese drivers, Toyota-FAW fell from China’s top ten sales list. Toyota China reported a 30 percent rise in sales in February, but at 45,400 units the firm was still way down from its 72,000 unit January performance.

Edmunds AutoObserver Michelle Krebs, commenting on the termination and replacement of Cadillac’s leadership, concluded, “If GM is going to change and is going to succeed, it must change people.” Paraphrasing Eistein, she added that “Doing the same thing over and over again with the same people in the same positions and expecting a different result is…insane.”

Michelle Krebs is far from the first to suggest that, to survive, a struggling company must replace the executives that oversaw its decline. And she won’t be the last. But this is a superficial solution that, without additional measures, will surely fail.

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Typically, the only reports on China’s BYD involve booming Chinese sales, unproven future products, and Warren Buffett’s investment in the battery and auto manufacturing conglomerate. But these don’t tell the whole story of how BYD has emerged from relative obscurity to publicly announcing that it intends to challenge Toyota to become the world’s top automaker by 2018. Chinese outlet Caixin [via GreenCarReports] attempts to shed some light on BYD and what it takes to rise to the top of China’s massive manufacturing industry, in a piece titled “How Manufacturing’s Mockingbird Sings.” The piece details BYD’s reliance on reverse engineering, the practice of stripping down competitor automobiles and components and copying them, and its extreme (even by Chinese standards) dependence on cheap labor.

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Inventory management woes have played a huge role in the decline of America’s domestic automakers, but according to a lengthy piece in Automotive News [sub], the days of inventory pushing are now officially a thing of the past. Unless they aren’t. At the moment things look good. AutoNation CEO Mike Jackson enthuses:

It’s the most exciting thing we’ve ever seen. I’ve lived for this day to come. The inventories for the industry are the cleanest and in the best shape ever — ever.

AN [sub] says inventory levels are at their most sane levels since they began tracking data in 1992. That gives Detroit executives the opportunity to crow over their discipline and the sustainability of their business models, despite the fact that the Detroit firms still top recent average incentive estimates. And long-term estimates show up to 2m units of overcapacity will be re-accumulated by 2012. “I hope [inventory push] is dead,” says Group 1 CEO Earl Hesterberg. “I doubt it’s completely dead just because of the fixed cost pressure on manufacturers.”

For years, TTAC has argued that General Motors suffers from a profound lack of accountability. Specific instances include the $2b “Fiatsco,” most of Roger Smith’s tenure, and cars like the Pontiac Aztek and Cadillac Cimmaron. Incidents like these helped GM along its decades-long plunge into bankruptcy, unchecked by the lax corporate governance of what came to be called its Board of Bystanders. Hyundai’s CEO may have received similarly lax treatment from South Korea’s criminal justice system, but at least the shareholders are standing up for their investment.
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Incentives are a tricky hand to play. On one hand, you can’t be mean in putting cash on hood, because you want to bring customers into your showroom. On the other hand, too much cash on hood, looks bad and in the long term, it’s proven to be bad for business. So, Edmunds’ January 2010 incentive figures for the United States [release via benzinga.com], were a very interesting read.
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Over the last few months, the media have become increasingly critical of Toyota and its handling of what has become an unintended acceleration crisis. Recently, Ralph Nader joined the fray, charging that Toyota has lost control of its quality control process. Has it? Is this crisis indicative of declining quality at Toyota? Should the cause (causes?) of unintended acceleration have been caught during the cars’ development? I’m not so sure. Once the cars were in customers’ hands—that’s another matter, and one all manufacturers could and should learn from.

Let’s step back from any urge to deal out some payback and consider the facts.

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Chinese automakers may not get government approval to expand their capacities, unless they first agree to take over another Chinese carmaker, says the Shanghai Securities News via Reuters.

China may have the largest auto market in the world, with 13.6m units sold in 2009, but China also has a big problem: Way too many automakers. There are more than 100 automakers in China. The exact number is unknown. China’s top 10 automakers accounted  for 87 percent of total sales, or 11.9m in 2009. The more than 100 small guys built some 1.7m units – together. That’s 17000 units each. (Read More…)

With the world starting to gain stability economically and economists talking about “bull markets” you’d be forgiven for thinking we can start to be optimistic and why not? Ford are flying high, GM (prodded by the government) are adding third shifts and Chrysler’s sales “only” dropped 3.7% in December. Well, don’t be too sure. CNN Money reports that a survey conducted by KPMG of 200 auto and supplier executive showed that 88% of them believe there is still too much capacity in North American plants. In fact, the survey showed that the executives believe that overcapacity is a bigger problem today than a year ago and when you look at the figures, it’s a bit of a no brainer.

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