Because success in the auto industry depends upon both the buildup of industrial might and deft maneuvering on the winds of fashion, analysts often struggle to determine how business decisions impact consumer choice. For example, GM and Chrysler long resisted the pressing need to file for Chapter 11 bankruptcy protection because their leaders believed that Americans would not buy a car from a bankrupt firm, and that sales would go into an irrecoverable tailspin if they filed. Needless to say, that assumption proved to be deeply flawed, and sales during the GM and Chrysler bankruptcies barely dipped (if only compared to the miserable months preceding bankruptcy). In any case, the rating agency Moody’s is taking on the challenge of translating good business news into sales by arguing [via Bloomberg]

U.S. consumers who don’t know anything about over- allocation options or the need for strong liquidity in a cyclical industry knew that something exceptionally good happened to GM last week. That knowledge makes it more likely that they will consider buying a GM vehicle and possibly buy one. That’s good for the company’s credit quality.

But does the general air of positivity surrounding the IPO actually make a difference with consumers?

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As an automaker and union-funded think tank, the Center For Automotive Research often run afoul of TTAC during the bailout debates of 2008-2009. CAR is to Detroit’s apologists what CAR has long maintained that a failure to bail out GM and Chrysler would have resulted in the total destruction of America’s entire industry, and based on that questionable assumption, it’s latest report [PDF] is claiming that the auto bailout saved the federal government $28.6b over two years. The study is an update of a report CAR issued in May which

produced estimates for two scenarios, as well: a quick, orderly Section 363 bankruptcy (which is what happened), and a drawn-out, disorderly bankruptcy proceeding leading to liquidation of the automakers.

Because those were the choices. A messy, marginally-successful intervention (with demand for GM’s IPO “through the roof”, the firm will still be worth only about what taxpayers put into it) or utter complete annihilation of the industrial Midwest. But if, as CAR takes as gospel, a halfway “normal” restructuring weren’t an option, it was only because the managers of both GM and Chrysler refused to even contemplate the possibility of a bankruptcy filing until it was far too late. And here’s where the long-term impacts get scary: by taking GM and Chrysler under the taxpayer wing, the Government may have saved some money in the short term, but it created a dangerous precedent for the future. Given the events of the auto bailout, why would the leaders of any other failing industry take the difficult path through restructuring when, with the help of think tank apologists, they could simply collapse into a publicly-funded do-over?

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The second-best thing about this video? The Dodge rep specifically notes that it’s embargoed until Monday. The very best thing? It’s been on Youtube for nearly a week. Autonetwork doesn’t play the embargo game… and as a result you get a quick peek at some new Dodges as well as a taste of the tedium that is a press launch event. Enjoy it while it lasts!

We don’t yet have understanding and expertise when it comes to mass production or even limited mass production. There is so much to learn, I don’t know quite where to start.

When the mess gets sorted out, I’d like to have a conversation with whoever’s in charge at the time — the car czar or whoever — and say “I’d like to run your plants, if you don’t mind”

GE plans on having half of its 45,000 employees driving electric vehicles as part of a $10b investment in clean technology over the next five years, and it’s kicking off the effort with an order of “tens of thousands” of EVs according to Bloomberg. Making the announcement at an event sponsored by the University of Cambridge’s Programme for Sustainability Leadership, GE CEO Jeffery Immelt told attendees

Now is exactly the time, because it’s less popular, where we have to invest more. We have to do it more courageously. And we’re going to have to go forward for a while without government at our backs

Experts call the buy the largest EV purchase in history, and say they expect the order to be filled by several companies. But, as a partner of Nissan-Renault ally Project Better Place, we expect the majority of GE’s order to be filled with the first mass-market pure EV, the Nissan Leaf. Much ink has been spilled over the long-term viability of electric vehicles on the consumer market, but little attention has been paid to corporations as a driver of EV sales. It’s possible that GE could be the first of a PR-driven corporate push to bring EVs into wider acceptance.

Bloomberg reports that a lawsuit accuses Toyota of a widespread coverup of unintended acceleration in its vehicles. The suit alleges that

“Toyota technicians” confirmed that vehicles were unexpectedly accelerating and the company bought back the vehicles, had customers sign confidentiality agreements and didn’t disclose the problems to regulators… In testimony about acceleration defects before Congress, Toyota Motor Corp. didn’t disclose that the technicians had replicated instances of sudden unintended acceleration not caused by pedals or mats… The company also didn’t report the customer agreements to the National Highway Traffic Safety Administration… Toyota ordered employees to remove names of executives from acceleration related e-mails and to stop using specific acceleration terms in e-mails to prevent damage to the company in litigation

Toyota’s response:

Steven Curtis, a spokesman for Toyota’s U.S. sales arm in Torrance, California, said today in an e-mail that no technicians for the company or field specialists confirmed unintended acceleration in vehicles. He said the plaintiffs’ lawyers are referring to service technicians employed by dealerships, which are independent businesses… the claims are based on anecdotes and fail to identify any specific defects in the vehicles.

Plaintiffs claim that dealer techs are “agents of the company” and that vehicle repurchases and confidentiality agreements are proof positive of a coverup. Toyota admits that it investigated and repurchased two vehicles after dealer techs found “acceleration events,” but says its factory technicians were unable to replicate any problems. If this sounds like a complicated mess of he-said-she-said, consider that this suit is just one of 300 currently pending against the world’s largest automaker. The lawyers will probably be busy with this one for decades.



Editor’s Note: On Monday, TTAC’s Martin Schwoerer wrote about a planned record-breaking non-stop run of 600 KMs, from Munich to Berlin, with a car that was equipped with a “revolutionary” electric battery system. Something smells funny, he said, and vowed to donate 100 Euros in case the drive was completed. Well, it was. So, how does it feel to have pie on your face?

How about Vegetarians Against the klan? Or maybe the Tugg Speedman Foundation? No, there are probably better organisations to give my money to. Guess I’ll ask the Best & Brightest… (Read More…)

You know that something is a fad when A) it’s bubbling on the stock market or when B) snake-oil salesmen tout the newest revolution, and regular folks actually start believing them.We’re not quite there yet with “A)”, but check out what I call an exhibit for “B)”. (Read More…)

Fiat could do more if it could cut off Italy

Having been handed a bankruptcy-rinsed Chrysler by the American government, Fiat’s Canadian-born CEO Sergio Marchionne is beginning to see Italy as nothing more than aging, uncompetitive factories and troublesome unions. And now he’s not just telling the Italian media that not only would Fiat be better off without the country that birthed it. According to Reuters

The CEO added that not a single euro of the 2 billion euros ($2.8 billion) of trading profit that Fiat is targeting for 2010 will come from Italy, where all Fiat car passenger plants are loss-making.

The funny part: Chrysler still holds a value of precisely zero dollars on Fiat’s balance book. And with the Fiat and Alfa-Romeo brands headed to the US, Italian-ness is still an important element of Fiat’s identity. But until Marchionne’s Chrysler revival and Italian invasion take hold stateside, and as long as mother Italia is a drain on its resources, Fiat might be best described as a Brazilian company.

Italian speakers can enjoy Marhionne’s interview here.

As we’ve noted before, Hyundai and Kia have been quick to exploit the weakness of the domestic auto industry by advertising their American-made cars as American-made cars. Now, they’re taking the attack to a whole new level, as Hyundai USA President John Krafcik tells CNN Money that his brand will build 80 percent of its vehicles in the United States by next year. If the Korean brand can actually achieve that goal, it would make Hyundai’s lineup the most American-built full line on the market. And though he insists that Hyundai doesn’t make decisions about production based on PR, Krafcik can’t help but twist the knife, saying

I’m going to build my three best selling cars in the US. Ford builds its best selling car in Mexico.

Oh snap!

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Aston Martin’s decision to sell a worked-over Toyota iQ has raised some serious questions for “brand values” advocates across the internet of late. Does an aristocratic sportscar brand need to take on the problems of urban congestion and carbon intensity? Does the Cygnet’s noblesse oblige PR value outweigh the furor of countless Aston Martin aspirants at the thought of their beloved brand becoming a glorified Toyota tuner house? The answer to both of these questions is apparently yes…
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Since we questioned Motor Trend’s decision to claim that it got 127 MPG in a Chevrolet Volt without publishing a trip log, the buff book has apparently come to terms with the fact that the Volt is “as efficient as you want it to be.” In a piece dismissively subtitled “Yes, Your Mileage May Vary. Welcome to the Real World,” MT Editor-in-Chief Angus Mackenzie publishes MT’s Volt test trip log, but not before harumphing

For decades we have routinely published “MT Observed” fuel economy numbers as part of our road test data. And apart from the odd complaint that we journalists always seem to have a heavy right foot, those numbers have drawn few comments. Until our Chevy Volt test.

No surprise, perhaps. After all, 127 mpg is a pretty big number. But, as outlined on the next page, it’s a real number. It’s what we observed during our test.

Except that nobody (here at TTAC anyway) was surprised at the size of the number. Because of the Volt’s unique drivetrain, it would have been eminently possible to record 300 MPG, given enough recharges. What was surprising is that a publication would throw out a meaningless number and then wait a day (and a call-out) to condescendingly provide the raw data behind their test. And even then, still not point out that the Volt’s post-EV range efficiency (described by MT in terms of “EV/Gas miles”) was actually under 36 MPG (in line with tests conducted by MT’s buff book “peers”). Finally, it might have been appropriate for MT to explain that, on this particular test anyway, a Nissan Leaf would have needed one extra charge (over the night of the 22nd-23rd) but would have returned infinite MPG (though the 100 mile claimed range would have been properly tested on the 23rd). But there we go being inconveniently rude again… and who are we to turn up our noses at MT’s (belated) transparency?

If the recent flap over the Volt’s drivetrain has taught us anything it’s that A) GM’s internal-combustion-assisted plug-in is more complicated than we thought, and B) GM is fine with simplifying its complex reality in order to make it appear as attractive as possible. Which is just fine: they’re the ones trying to sell a $41k car, and as such they’re entitled to do what they can to make it seem worth its many shortcomings. What the automotive media needs to take away from the brou-ha-ha isn’t necessarily that GM’s hesitance to bring forward “the whole truth” is an intrinsically big deal (let’s just say this wasn’t the first time), but rather that knowledgeable writers should focus on explaining the Volt in ways that are both comprehensible and fully accurate. In this spirit, the most important question isn’t “what should we call the Volt?” but “how efficient is the Volt in the real world?”And on this point, there’s plenty of room for some truthful clarification.

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As GM finally begins to let journalists drive its Chevy Volt, the two-year-long trickle of bad news about the project is turning into a raging torrent. The latest bit of bashing: InsideLine claims that, in direct contradiction to GM’s hype, the Volt is in fact powered by its gasoline engine under certain circumstances.

At the heart of the Volt is the “Voltec” propulsion system and the heart of Voltec is the “4ET50” electric drive unit that contains a pair of electric motors and a “multi-mode transaxle with continuously variable capacity.” This is how GM describes it:

“Unlike a conventional powertrain, there are no step gears within the unit, and no direct mechanical linkage from the engine, through the drive unit to the wheels.”

The 4ET50 is, however, in fact directly bolted to the 1.4-liter, four-cylinder Ecotec internal combustion engine. When the Volt’s lithium-ion battery pack runs down, clutches in the 4ET50 engage and the Ecotec engine is lashed to the generator to produce the electric power necessary to drive the car. However under certain circumstances — speeds near or above 70 mph — in fact the engine will directly drive the front wheels in conjunction with the electric motors.

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