MOTOROBILIA

Toyota Sales Suspension: Bold Move, Hail Mary or Sepuku?

noreply@blogger.com (Ronnie Schreiber) — Wed, 27 Jan 2010 18:14:00 +0000

Toyota has announced that they are suspending North American sales of 8 models affected by the recall relating to unintended acceleration and or sticky gas pedals. They are also idling 5 US assembly plants "to assess and coordinate activities" while they are working to resolve the problem.

This is a huge move, unprecedented in the industry. It involves the heart of the Toyota lineup, including the Camry and Corolla, so the pressure from dealers on Toyota will be enormous. Toyota has to come up with enough of a fix so they can resume sales. Without those 8 models, the dealers don't have much of a showroom.

The question is will this move be seen as Toyota resolutely responding to consumers or will it be seen as the latest chink in their formerly bulletproof reputation for reliability?

The Truth About The Automotive Carriage Trade

noreply@blogger.com (Ronnie Schreiber) — Wed, 27 Jan 2010 18:05:00 +0000

I know someone that lives an automotive fantasy. He's been a car guy his whole life. Success in business has given him the means to drive virtually any car on the planet. He owns cars that most of us only see in pictures, or perhaps get a glance at them behind the ropes at a car show. The Ferrari he drives is an Enzo, the greatest Ferrari ever. The Lamborghini in his garage is a LP640 Murcielago, the most potent bull in Sant'Agata's stable. How many of us have gotten behind the wheel of a Bugatti Veyron, let alone wire $1.5 million to Molsheim for a car made to our order?

It's a world of private studios, like the ones Maybach dealers have, where well-heeled and well-coifed customers are cosseted while they choose from a huge selection of fabrics and interior woods, leathers and even marble. If this cornucopia is not sufficient, the companies will cater to the customers' own suggestions.

I had a thought, though, while watching Bentley's press conference at the 2010 NAIAS in Detroit. They were giving details about Bentley's personalization program. All the ultra luxury marques have one. Whether it's Rolls-Royce's Bespoke, Lamborghini's Ad Personam, or Ferrari's Corrozzeria Scaglietti, all of the big buck car companies offer their wealthy customers the opportunity to have their cars fitted and trimmed to their tastes. So far most of these programs have focused on interior features and trim. Now Ferrari, reacting to the positive response to James Glickenhaus' one-off Enzo based P4/5 by Pininfarina, has announced their One-to-One program, wherein the Italian supercar company will build cost-no-object one-of-one custom cars. Supposedly they will work with the customer to put whatever bodies they want on Ferrari platforms, providing they can be properly and safely engineered.

This is supposed to be a throwback to the era when Duesenberg, Lincoln, and Bugatti sold customers a rolling chassis, which were then sent to coachbuilders for custom bodies.

I worry, though, that the end results will be more Corvette Summer than Bugatti Royale.

The problem with building a car to the customer's tastes is that frankly, some customers have bad taste. At the press conference, Bentley showed a photo of a very well crafted but rather garish interior, filled with tuck and rolled leather in ivory and British racing green. I was wondering, is there some personalization that a fancy car company won't do?

So I asked the only guy I know who's ordered a Ferrari or two.

Q: I suppose my question to you is that will the various bespoke, ad personam, and personalization programs for the high end marques really do whatever someone wants?

A: I don’t even ask about these programs as I agree with you they detract from what the car was meant to be.

Q: Exotic cars are not subtle to begin with. Does a Lamborghini Gallardo really need lime green paint with a lime green interior to get attention?

A: Actually, I have a lime green LP640 with charcoal interior with lime green stitching, nice but I should have kept the Orange color I had before. My wife calls it the Kermit car…lol.

Q: When you buy a car, house, boat, clothes, or whatever has some style, you're paying for the designer's taste. It seems to me that there's a point when one of those companies is going to say, no, we won't put our brand on that, it's ugly and makes us look bad, no matter how much you're going to pay.

A: A true yacht is a one off custom item and by definition is custom, but I agree that the car makers should learn to say NO so they don’t cheapen their product. (note: His previous, smaller, boat was 124 ft.).

Q: That makes sense. A yacht is more like a home, more personal than a car. Speaking of homes, you have a home near Scottsdale and you've been to the January car auctions there. At Barrett-Jackson this year custom Corvettes did very well. Not as well, of course, as 100% original cars, but some of the custom Vettes and other resto-mods brought very strong money, considering the recession. You said that when it comes to production cars you prefer relying on the factory's taste. What about customizers?

A: I like some of the very high end custom cars. I got burned on a Foose '69 Camaro from Trent Performance, they went belly up before I got my car. I really wanted that thing

Q: Do you still own the Enzo?

A: Yes.

Q: What's the next car in your garage?

A: A Ferrari 458.

Q: One last question. You can afford any car built today. Does it bother you and other well heeled car buffs that some high end car makers, like Ferrari and now apparently Toyota with the Lexus LF-A, pick and choose which customers they will deign to allow to buy one of their ultra limited edition models?

A: Yes very much so, even Gulfstream changed when they rolled out the G650, did it by way of a lottery and God forbid you try and sell your position, they will put you in Guantanimo.

Ferrari may not send anybody to Gitmo for taking cuts in line but they do reserve limited editions to selected customers. Only those tifosi with the purest faith were considered, for example, to be allowed to purchase one of 20 FXXs made. My source will remain anonymous. No matter how much money and power he has, he's still waiting for his new 458.

Pelosi, Hoyer, LaHood Beclown North American Auto Show

noreply@blogger.com (Ronnie Schreiber) — Wed, 27 Jan 2010 17:59:00 +0000

The drama of the domestic automakers continues to make the media preview of the North American International Auto Show (NAIAS) in Detroit a must-attend event for journalists. Reduced circumstances may have forced some manufacturers to forego expensive concept cars, catered press conferences, or even displaying at all in Detroit (in the case of Nissan/Infiniti), but still over 5,000 press credentials were issued to journalists, photographers, broadcasters, and bloggers from around the world.

In the wake of the government bailout of GM and Chrysler, with so many reporters present it’s not surprising that the show organizers would also have to issue a large number of credentials to politicians — eager to get publicity and to show the automakers just who is in charge.

The first day of the media preview started at 7:30 a.m. with a press conference for Transportation Secretary Ray LaHood. It ended at 5:30 p.m with a press conference for House Speaker Nancy Pelosi and the rest of the congressional delegation.

Someone threw an auto show, and a political rally broke out. Local, regional, and state politicians are nothing new at the NAIAS, but this year there were scores of politicians and staff members from Washington as well.

From the Obama administration, there were two cabinet members (LaHood and Labor Secretary Hilda Solis), senior EPA official Marg0 Oge, and the head of the National Highway Traffic Safety Administration, David Strickland. Each of them traveled with an entourage of PR people and agency employees. It’s possible that there were also representatives attending from the Department of Energy as well. From the legislative branch, in addition to Michigan’s Debbie Stabenow, Tom Carper of Delaware (who brought his teenage son along) represented the U.S. Senate. Speaker Nancy Pelosi was accompanied by 15 of her colleagues from the House, including Majority Leader Steny Hoyer. Rep. Fred Upton, of western Michigan, was Pelosi’s “bipartisan” fig leaf — the only Republican in the delegation.

Her remarks, and those of Hoyer, were essentially cheerleading for the Democratic agenda and the Obama administration’s decision to effectively nationalize General Motors and turn control of Chrysler over to Fiat.

The Chrysler decision has been attributed to Steve Rattner, whom President Obama appointed to head the Presidential Task Force on the Auto Industry. Rattner was also at the NAIAS. Interestingly, though Rattner works for the Obama administration and though the administration insists it isn’t closely managing GM and Chrysler, Rattner’s badge read “GM” and he walked the Chrysler exhibit with Sergio Marchione, Fiat’s CEO.

I spoke with Rep. Gary Peters, whose district is in Oakland County, just outside of Detroit. I questioned the value to taxpayers of spending so much money bringing Speaker Pelosi and Peters’ other colleagues in for what amounted to a dog-and-pony show.

Peters agreed that one of the problems that people in Michigan and the auto industry faced was that his colleagues were “completely clueless” about the auto industry, and he hoped that the trip might educate them. How broad an education you can get on such a brief trip is open to question, but the fact that many of his colleagues in Congress and in the Obama administration are clueless was plain to see from the LaHood and congressional press conferences.

LaHood told the assembled automotive journalists about the bright future the domestic automakers face now that they’ve been assisted by the Obama administration. Nobody disputes that GM and Chrysler would most likely not have any future at all without the bailout. The transportation secretary based his remarks, he said, on a visit he made to Detroit last fall when he spent “half a day” at each of the domestic automakers’ headquarters. The “half a day” remark brought smiles to many in the room who have spent years following the auto industry. The smiles broadened when he referred to “new products” from Chrysler. Even people outside the auto industry know that Chrysler’s quiver is empty.

That was just too much for one reporter, who challenged the cabinet member [1]:

In your opening remarks you mentioned new products by Chrysler, could you expand upon that?

LaHood’s first instinct was to punt, but instead he reversed course and doubled down. Punting would have been the wiser choice.

Well, you know what? I’ll let Chrysler do that and I think as you all get around this massive showroom you’ll see what I mean, but they’re on the cutting edge of developing the kind of products that I think people in this country and also in other countries are really gonna feel very favorable towards.

Walk around Chrysler’s display on the show floor upstairs in Cobo Hall, and you will see exactly zero new products.

There was a Lancia rebadged as a Chrysler concept (dubbed “Guido” by the auto blogosphere), and a couple of cute little Fiat 500s to show that Chrysler was now under Fiat’s wing, but nothing at the Chrysler stand could be described as “new.” Chrysler did display a number of new trim and feature packages on its now aging stable of cars.

Maybe the die-cut decals are what LaHood meant by “cutting edge.”

During the “merger of equals,” Daimler hollowed out Chrysler and then sold out to Cerberus, which invested almost nothing in new product development. With the compact Caliber, midsize Sebring, and midsize Avenger generally considered worst-in-class, Chrysler has nothing in the pipeline to compete in those vital market segments. Everyone knows that — except the U.S. secretary of transportation.

LaHood continued:

Chrysler particularly, the kind of designs that they’re doing, the kind of innovative approaches that they’re taking is gonna really put them in the marketplace like they’ve never been before … as innovative, creative as I’ve ever seen in the industry.

True, Fiat is bringing in new blood and new designs, but nothing LaHood would have seen while breezing through Auburn Hills last October is going to make a difference to consumers or to Chrysler’s bottom line any time soon. It takes a minimum of two years to design and build a completely new car, and that’s after some time has already been taken to design, evaluate, and approve concepts.

In his remarks, Secretary LaHood referred to “the kind of green car that Americans are looking for.” Speaker Pelosi and Majority Leader Hoyer also stressed how government financial aid is helping the domestic automakers move to hybrids and electric vehicles, vehicles Pelosi and Hoyer claimed that consumers want.

The problem is that while hybrid sales in the U.S. indeed went up in 2009 as the overall market was flat or declining, they still represent less than 3% of light vehicles leased and sold in the U.S. Between LaHood’s praise for Chryslers “new” products and Pelosi’s fantasy that 3% of the market represents what consumers want, it appears that the people running our government know nothing about a major industry that employs, ultimately, one in twelve Americans.

Either that, or they are incredibly cynical and will say whatever they think they can get away with.

Americans may be looking for green cars, but they may not want to pay a premium. Hybrids and EVs are not cheap and will not repay their price premium at current gasoline prices. The politicians may say that consumers want green cars, but they know that without substantial government subsidies, the new technologies are too expensive for immediate mass acceptance. When Chevy’s extended range EV car, the Volt, goes on sale, it will carry a $7,000 federal tax credit. Just before Speaker Pelosi’s press conference, Billy Ford announced that Ford would be investing $450 million to assemble lithium-ion battery packs, a gas-electric hybrid vehicle, and a plug-in hybrid vehicle in Michigan. With $188 million of that coming from tax credits, it’s not surprising that Michigan Gov. Jennifer Granholm joined with the Ford chairman in making the announcement.

You expect to see certain things at a car show: shiny new cars, exciting concepts, and pretty models. I think we can add politicians to that list for the foreseeable future.

UPDATE: The Detroit show wrapped up this past weekend. The NAIAS is one of five major auto shows in North America, along with New York, Chicago, Los Angeles and Toronto. Along with the really big shows, there’s a circuit of regional shows in other major markets. While automotive executives are pretty commonplace at the major shows, you’re not as likely to find a CEO at one of the regional events.

The Washington Auto Show starts later this week. As if to underscore the movement of the domestic auto industry’s center of gravity to Washington, Ford CEO Alan Mulally will be keynoting the Washington show’s media preview. At the Detroit show, General Motors announced that Michigan would join California as a launch market for Chevy’s Volt extended range electric vehicle. Today, in advance of the Washington show, GM announced the greater Washington, D.C., area as the third launch market.

“Concentrating Volt sales in these three key initial markets allows us to give our first customers a high-quality experience,” said Jim Campbell, Chevrolet general manager. “In addition to geographical considerations, each market also has progressive local and state government leaders and utility partners who are crucial in bringing electric vehicles to market.”

Key initial market indeed.

Article printed from Pajamas Media: http://pajamasmedia.com

URL to article: http://pajamasmedia.com/blog/pelosi-hoyer-lahood-beclown-north-american-auto-show/

URLs in this post:

[1] challenged the cabinet member: http://www.youtube.com/watch?v=ATmxFEUx7bc

Hey dude, mind if I smoke your car?

noreply@blogger.com (Ronnie Schreiber) — Mon, 02 Feb 2009 21:47:00 +0000

Green is the new, well, green. Automakers large and small have jumped on the (biofuel powered) bandwagon, hoping that way lies profit, or at least a government handout. Group Lotus didn't want to merely bask in the reflected green light from their customer Tesla, they've introduced the new Eco Elise concept to display their own corporate enviro bone fides.

You know we're in a new era when one of the world's great sports car companies starts using words like "holistic" and "progressive".

The Eco Elise may appear to be a normal Elise S with a different paint job and interior trim, but that similarity is only skin deep. Actually, it's not even skin deep. The Eco Elise has body panels made not of fiberglass or carbon fiber but rather uses hemp to reinforce the plastic composite. That's hemp, as in pot, reefer, weed, chronic etc. Okay, so this "sustainable" hemp, grown in nearby Anglia to keep carbon impact down, was crossbred to deliver strong fibers, not sticky colas, but like all hemp plants it still has some level of THC, marijuana's active ingredient, albeit miniscule.

Hemp is also used in the hardtop and in the construction of the lightweight seats. Other green features are sisal carpets, naturally colored wool upholstery, and an eco-friendly water based, low temperature curing paint process developed by DuPont. To highlight the hemp material, a racing stripe of the clear-coated composite runs the length of the Eco Elise. The shift indicator light has been reprogrammed to encourage better fuel efficiency. They even managed to trim 70 pounds of weight. Since the base Elise already reflects Colin Chapman's dicta: "add lightness", most of the weight reduction comes from using lightweight wheels and a lightweight audio system, I assume with smaller and lighter magnets in the speakers.

I wonder if the Eco Elise comes with an ashtray. Just don't try driving the Eco Elise through customs.

The Jew Who Invented The Volkswagen& Other Jewish Automotive Pioneers

noreply@blogger.com (Ronnie Schreiber) — Sun, 25 Jan 2009 03:47:00 +0000

You know how you notice things and keep mental lists? You sort of store things away and then something notable happens and you make a connection. For a while now, I'd research this or that automotive subject and discover that someone who I was already familiar with in the automotive world turned out to be Jewish. Jewish scientists, entertainers and businessmen are pretty well known, but perhaps because of Henry Ford's infamous Jew hatred and the connection of the Volkswagen to the Third Reich, in the popular mind cars aren't something associated with Jewish success. Actually, as I have found out, at least two important pioneers in the history of the automobile were in fact written out of history by the Nazis. Still, a surprising number of true automotive pioneers were in fact Jews. Well, maybe not surprising in light of the success of Jews in other technical and scientific fields, but something not previously noticed. So I was keeping a mental list. Then I found out about Josef Ganz, thanks to a Dutch engineer and writer named Paul Schilperood. Schilperood is writing a book about Ganz titled The Prevented Volkswagen and its his life's mission to restore Ganz to his rightful role in automotive history. Ganz was a respected automotive engineer and technical writer in Germany in the 1920s and early 1930s. As a consultant he worked on both the BMW AM1, BMW's first in-house automobile, and the Mercedes-Benz 170, a landmark design that was in production for over 20 years, both before and after WWII. Schilperood makes a compelling case that the Nazis, Ferdinand Porsche and Tatra essentially stole the concept and design of the original Volkswagen from Ganz. In 1933 Standard Fahrzeugfabrik, a German automobile company, displayed the Standard Superior "volkswagen" based on Ganz' designs and patents at the Berlin auto show, attended by Adolph Hitler and Hermann Göring. A year later Ganz was in a Gestapo jail. Eventually he escaped to Switzerland and after the war emigrated to Australia where he worked for Holden.

When I found out about Ganz the mental list that had been percolating came to the surface and I decided to write a book about Jews and cars. The funny thing is that the list keeps getting longer. Just tonight I was starting to write about Siegfried Marcus, a Viennese Jew who in 1870 was the first person to power a four wheel vehicle with a gasoline powered internal combustion engine, and also invented the carburettor and magneto ignition. Marcus was once well known as a automotive pioneer. There were four memorials around Vienna to his technical accomplishments, including a plaque in front of the technical university, but after the 1938 union of Austria with Nazi Germany they were removed.

Siegfried Marcus' first vehicle - 1870

Marcus' second vehicle - late 1880s, around the same time that Daimler and Benz were making the first practical vehicles.

While reading about Marcus I found out that in the 1850s Abraham Schreiner, a Jew in Galicia, was the first person to successfully "crack" petroleum to extract naptha, first used as a lighting fuel, later used in the formulation of gasoline. Twenty years after Schreiner "invented" gasoline, Marcus figured out how to harness it's tremendous energy density to move a vehicle. The internal combustion engine has reigned ever since. At the time of this writing, though, gasoline/electric hybrids and battery electric vehicles are now becoming a practical alternative to the ICE. It turns out that before gasoline, there was a Jew working on electric vehicles. Researching Schreiner, I found a reference to a M. Davidsohn of Darmstadt, who around the same time, in 1854, created an electric powered vehicle. The problem with Davidsohn's electric car was the same as current EVs face, batteries with enough energy density. Davidsohn faced much more serious challenges as battery chemistry was pretty primitive in 1854. Forget lithium ion, lead acid batteries weren't even invented yet.

I hope to devote a chapter to each notable Jew important to the auto industry. Fortunately for my research the National Automotive History Collection of the Detroit Public Library is one of the largest of its kind in the world. Unfortunately, due to budget cuts, the DPL now charges non-residents a $100/yr or $10/day fee for using their collections.

Anyway, here's a list that I have so far:

Industrialists and Entrepreneurs
Gerald Greenwald, vice chairman of the Chrysler Corporation
Adolf Rosenberger - German businessman and racing car driver. Helped finance Porsche's engineering firm in 1931, and was instrumental in the famous Auto-Union racing cars from the 1930s
Malcolm Bricklin - first importer of Subarus to the US, later produced Bricklin sports/safety car, and founded Yugo enterprise.
André Citroën - engineer and industrialist, founder of the Citroen car company
Emil Jellinek - entrepreneur and Daimler board member who had a seminal role in the development of the Mercedes 35hp, considered by many to be the first "modern" car. The "Mercedes" Benz was named after his daughter.

Engineers & Designers
Josef Ganz - automotive pioneer, developer of BMW's first car, the AM1, consultant on the landmark Mercedes-Benz 170, and probably originator of the Volkswagen Beetle.
Siegfried Marcus - in the 1870s designed the first gasoline powered car, invented the carburetor and was an early developer of magneto ignition.
Albert Kahn - architect, developer of the modern automobile assembly plant, designed Henry Ford's Highland Park Model T plant and Rouge Complex, as well as the giant Packard plant.
Zora Arkus Duntov - engineer, 'father' of the Corvette and force behind Corvette racing.
Jerry Hirshberg - Designer, artist, founder of Nissan Design International
Abraham Schreiner - Inventor of naptha/gasoline - first successful cracker of petroleum
M. Davidson - early electric car darmstadt 1850s
Victor Houk - hybrid car inventor

Race Car Drivers
René Dreyfus - racer, restauranteur & raconteur
Peter Revson - racer
Mauri Rose - winner of the Indy 500
Kenny Bernstein - champion drag racer
Jody Sheckter - Formula One champion
François Cevert - racer

Journalists
L.K.J. Setright

Sen. Bingaman: Taxpayers should own Chrysler, not Fiat

noreply@blogger.com (Ronnie Schreiber) — Fri, 23 Jan 2009 07:13:00 +0000

The American taxpayers already loaned Chrysler $4 billion. The Auburn Hills automaker has their hand out for $3 billion more and what do the taxpayers get? A full page ad thanking them and a bunch of IOUs. Meanwhile Fiat picks up a third of Chrysler from Cerberus for little more than blue sky and a business plan. Political and economic ideologies aside, it doesn't seem fair.

Sen. Jeff Bingaman, D-NM, agrees.

During the confirmation hearings for President Obama's nominee for Secretary of the Treasury, Timothy Geithner, Sen. Bingaman asked him about Fiat's acquisition of 35% of Chrysler for no cash while the government has already loaned Chrysler $4 billion and is being asked for another $3 billion. Bingaman raised a question many people have asked about the automaker loans, "It's hard to explain why the American taxpayer shouldn't own Chrysler." He has a point. I'm certainly not in favor of nationalizing businesses, but if the equity value of Chrysler is so low that they can trade away a third of it for a strategic partnership and no cash, the taxpayers should be getting something more than just an IOU. At least when Daimler bought Chrysler, they didn't ask US taxpayers to finance the deal.

On paper, it makes sense for all parties involved. Chrysler gets new product and stays in business. Cerberus offloads 35% of a headache. Fiat gets access to the US market.

Fiat will back out of the deal if the additional $3 billion isn't forthcoming, and if Fiat isn't anteing up any cash, somebody's got to pay for adapting the Fiat platforms etc for the US and retooling the plants. That's where Uncle Sugar comes in. Cerberus, Chrysler and Fiat are hoping that the business sense of the deal is compelling enough to obscure what is happening here - that US taxpayers are financing the deal. From Sen. Bingaman's comments that hope might have been misplaced.

Geithner: Comprehensive Restructuring, Substantial Change in DetroitGettlefinger: Define Restructuring

noreply@blogger.com (Ronnie Schreiber) — Thu, 22 Jan 2009 21:00:00 +0000

UAW president Ron Gettlefinger was "out of pocket" yesterday. He flew back to Detroit yesterday from President Obama's inauguration, and when he got home he did what most Detroiters have been doing for the past month. No, he didn't check the Internet or cable news for the latest bad tidings about the auto industry. He shoveled some snow. This winter of discontent in Detroit has been a very snowy one. After clearing out his driveway the head of the UAW drove downtown to speak to the Automotive News World Congress at the RenCen Marriott. So when Mr. Gettlefinger addressed the AN shindig last night, he hadn't heard Treasury Secretary designate Timothy Geithner remarks in his confirmation hearings in the Senate yesterday afternoon.

Geithner said that any further financial aid to the domestic automakers is contingent on major changes.

"Any assistance the government provides is assistance in support of a comprehensive restructuring that will leave the industry in a stronger financial position where they can be profitable and healthy without government support… That's going to require very, very substantial changes by all stakeholders."

"Comprehensive restructuring", and "very, very substantial changes" might scare a union official of fainter heart but regardless of what Geithner said, Gettlefinger is hoping that with Democrats in control of Washington, the "stakeholders" that he represents won't have to take "too big of a hit."

In his remarks to the AN world congress, Gettlefinger said, "We know that additional sacrifices may be required to get these companies back on track. But all stakeholders will have to participate. Any attempt to single out one group to bear the brunt of the changes needed within our industry will fail, because no one group can solve the problem alone."

One of the things that hurt the Detroit automakers during the congressional hearings in November and December was the fact that the UAW gives millions of dollars in campaign funding and political assistance to Democrats. The UAW's chickens came home to roost when the Senate Republicans had the power to kill the congressional loan package. Gettlefinger didn't get to be president of the UAW by being a bad negotiator. Now he's expecting that the UAW's money was well spent and business as usual in Washington will spare his members from major concessions, no matter what Geithner said on Capital Hill.

During his address Gettlefinger said that "UAW members are optimistic about working with the new congress." I don't want to say that the fix is in, and I'm not sure if the Vegas books will take any action on legislative activity, but if I was a betting man…

After the speech, a reporter from Detroit's WDIV TV news asked the UAW chief about Geithner's remarks calling for change and restructuring. The Obama nominee has worked for Treasury or the Fed for most of his adult life, so he's no naif in the ways of Washington, but Gettlefinger is going to school him on the way things really work in the nation's capital.

Regarding "restructuring", Gettlefinger said, "I'm not sure exactly what that means at this point in time, and I didn't hear it… I missed out on the hearings today but again a lot of times people make statements and then when they look at the facts it's a lot different."

Gettlefinger no doubt figures that Obama is in charge, not his Treasury secretary, and that the newly sworn in president and a Democratic Congress will by sympathetic to the UAW. Concerning Obama, the UAW president said, "He knows and we know that a strong manufacturing base, including a strong domestic auto industry, are vital to the future of the U.S. economy."

From what chairman of the House finance committee Rep. Barney Frank, D-MA, said, Gettlefinger is right. Frank, who has been a vocal critic of the concessions demanded of the UAW in the Bush administration's loan package, was speaking on the occasion of a largely symbolic House vote reaffirming the loan conditions. Frank said, "I'm sure Obama will change those."

Regarding those conditions, the deadline for GM, Chrysler, their creditors and the UAW to come up with a plan that Congress will consider viable is February 17th. Theoretically, if the benchmarks aren't met the government will pull the loans already granted, which would mean immediate bankruptcy.

When asked if the details can be hammered out in less than a month, Gettlefinger said, "I think we can be ready… it's going to be a push on the time." Like I said, Ron's a great negotiator. He had a failsafe loan from President Bush in his back pocket when playing hardball with Senators Corker and Shelby. He now knows that he can dig his heels in negotiating with GM & Chrysler between now and Feb. 17th and a Democratic congress and President Obama will back him up.

Something Detroit Does Well

noreply@blogger.com (Ronnie Schreiber) — Wed, 21 Jan 2009 07:08:00 +0000

With all that the domestic automakers have done wrong, one thing they've always done well is heating, ventilation and cooling, HVAC. In a post at The Truth About Cars about dumb moves behind the wheel, Jonny Lieberman mentioned how even when Detroit was making malaise era cars that barely ran, their HVAC systems were the "envy of the world" and more or less continue to be. Sure, Volvos and Saabs had good interior heating and defrosting systems, not to mention heated seats, but Detroit gave the world automotive air conditioning. Detroit also pretty much invented functioning ventilation systems.

The city of Detroit has always affected the nature of the cars that the domestic automakers produce. In European cities streets are narrow and go in all directions, so small cars, handling and cornering were important. Detroit's streets are broad and for the most part on a 90 degree grid, so suspensions were calibrated more for comfort than precision handling and the cars were large boulevard cruisers.

Likewise with HVAC. Every year when the NAIAS rolls around people question the wisdom of holding a big auto show in Detroit in January. It gets cold in Detroit. Real cold. Maybe not Fargo or International Falls cold, but cold enough to evoke mention of brass monkeys' balls, witches' tits and well diggers' asses. Single digit Fahrenheit temperatures are not uncommon and subzero temps can happen any winter. The coldest it's ever been that I recall is 20 below and in the 1990s, there was a four day period when the air temperature never got above zero.

From the perspective of a Detroit automobile executive in the 1960s, it's understandable how the Volkswagen Beetle could have been dismissed. Even a pristine Beetle back then had inadequate heat. There was no electric blower on the heating system, just the engine cooling fan. Pressurized air was ducted off of the cooling shroud into the headers/heat exchangers. Heat, then, was speed sensitive under the best of circumstances. After a Michigan winter or two, with the salt on the roads, the heat exchangers and heat ducts were perforated with rust. Small wonder that VW offered a gas heater, a self contained 18,000 btu gasoline fired furnace.

Those same Detroit auto execs and their contemporary counterparts may have had access to company motor pool cars so they never experienced the joy of dealer service managers and warranty work, but they still had to deal with Michigan weather on the way to and from work. Like I said, it gets cold in Detroit and the auto execs don't like to be cold. Neither do engineers. At the same time while Detroit's not in the desert, in the summer it gets real hot, with temps sometimes reaching the high 90s, now and then up to 100 degrees. There are places in the United States that get colder than Detroit, there are places that get hotter, but there are few places outside of the Great Lakes region that have as wide a temperature swing. Staying comfortable was a Detroit imperative. It was also a way to make more money on a car. Heaters were extra cost optional equipment into the 1960s.

Also by the 1960s the domestic automakers were improving the ventilation systems. Cars had air vents in the fender wells, with cable actuators on the kick panel. Flow through ventilation integrated into the heating system followed. In the 1960s, air conditioning became a factory option on popularly priced cars, though some folks went with aftermarket units that hung under the dash. What was introduced by Packard in 1939 as an ultimate luxury item ultimately became standard equipment.

My dad, may he rest in peace, loved air conditioning. In the summer he'd keep the house at 68 degrees. American Motors used to label the maximum A/C setting as "Desert Cool". They must have had my dad in mind. Though he liked his options, as far as A/C was concerned, they could have had a single setting: max cool, max fan. In the 1970s he switched from Oldsmobiles to Mercurys and you could have cooled your drink on the dashboard of his 1974 Grand Marquis.

As Jonny pointed out, Detroit still is pretty much the standard when it comes to keep you comfortable in an automobile, temperature wise. I've never driven a Detroit product that couldn't blast full heat in subzero weather, or that couldn't keep you comfortable on a blistering hot summer day. Just about every automaker in the world now makes fairly sophisticated climate control systems but I think that's a case of meeting a high standard that Detroit has set.

Longtime Michigan Automaker Files For Bankruptcy

noreply@blogger.com (Ronnie Schreiber) — Tue, 20 Jan 2009 07:04:00 +0000

The Detroit critics and bashers have finally gotten their wish, the bankruptcy of a legendary domestic auto nameplate. The UAW doesn't get much lovin', so no doubt there will be some schadenfreude over obstinate union members refusing to negotiate concessions, driving their employer into filing for bankruptcy protection from their creditors. Okay, so maybe the automaker in question is based in Kalamazoo, not Detroit, Auburn Hills or Dearborn, and to be precise it hasn't built any cars for at least 25 years. However Checker Motors Corp. still exists as a corporate entity and last week that corporation filed for Ch. 11 reorganization in U.S. Bankruptcy Court in Grand Rapids.

Checker Motors Corp., started making cabs in Kalamazoo in 1922. Though it stopped production on its iconic Checker sedan and cab in 1982 rather than give in to labor demands at the time, it has continued on as a vendor to the Detroit automakers, supplying them with body and chassis components. The 87-year-old company has 246 employees with assets of $24.5 million and liabilities of $21.8 million. Checker posted net sales of $63.4 million in 2007.

During the debate over federal loans to the domestic automakers, a number of analysts predicted that if any one of the three automakers declared bankruptcy, the other two would have to follow suit. Bankruptcy allows the abrogation of labor contracts and an automaker in Ch. 11 proceedings would be able to lower labor costs significantly, putting the other car makers at a competitive disadvantage. If GM filed for Ch. 11, Ford would almost be forced to do so just to stay competitive.

That's exactly what has happened to Checker. Checker is the eighth major US auto supplier that has filed for bankruptcy in the past year. One reason Checker cited in their bankruptcy filing is a need to have wages that are competitive with other suppliers already in bankruptcy proceedings. The company tried to negotiate wage concessions from its employees' labor union but even with bankruptcy hanging over their heads, the union wouldn't make the needed concessions.

The bankruptcy filing also cited the decreased market shares of its customers. Checker sells stampings and welded assemblies to all three of the domestic automakers and the domestics have lost about 5% market share from 2007 to 2008. I suspect that the 35% decline in overall sales is a great factor than decreased market share.

Supporters of government assistance to the domestic automakers were called Cassandras for predicting a cascade of supplier bankruptcies should any of the domestics be forced into Chapter 11 or 7. With at least 1/3rd of domestic auto suppliers already financially distressed, it may not even take a failure of one of the large automakers to start that cascade. The same day that Checker filed, Lansing based automotive electronics supplier May & Scofield closed its doors after Bank of America foreclosed on its U.S. assets.

Scottsdale Auctions - Detroit Once Had Mojo And Made Cars That Are Still DesirableCan Detroit Get Its Mojo Back

noreply@blogger.com (Ronnie Schreiber) — Mon, 19 Jan 2009 07:01:00 +0000

The last hammer has fallen at the mid-winter Scottsdale, Arizona collector car auctions. I'm no expert about the collector car market but it seems to me that while prices are down from their high marks during the cheap credit bubble, they aren't cratering. What I find fascinating is that while the domestic automakers struggle to stay alive today, their products from the 1950s, 1960s, and early 1970s continue to draw interest from collectors. Detroit had some serious mojo going on back then. It wasn't, as some Detroit bashers would have us believe, that Detroit was just feeding us crappy cars because we had no choice. There was a time when Detroit made products that were so desirable then that they continue to be desirable today.

When I was in high school in the early 1970s and got my driver's license, I drove a hand-me-down 1966 Impala SS. Like many cars Chevy has badged with the SS designation over the years, it had all the look fast parts, bucket seats, console shifter, SS badges etc. but had none of the go fast parts, just a two barrel 283 V8 and a two-speed Powerglide. It had a MSRP of $2,789 in 1965-66.

You're not likely to find many "2 barrel 2 speed" combinations at Barrett-Jackson or the other Scottsdale car auctions, but the mid 60s full size Chevys are still popular. Indeed this year's B-J auction saw six 1966 Impalas go on the block, with prices ranging from $14,300 for a non SS Impala with the small block 283/Powerglide setup to $39,600 for an Impala SS equipped with a 427cid/425hp big block V8 and a four speed Muncie transmission. Like I said above, their appeal endures.

In 1966, GM delivered about half the new cars sold in the US. Chevrolet was its best selling brand. The full size Chevy, the Impala, Caprice and the less costly Biscayne and Bel Air, was arguably the best selling car in America. It sold well because it satisfied customers' needs. Available with everything from an inline six to a big block V8, the Chevy was comfortable, fast (well, depending on what was under the hood), stylish and big. Maybe not as big as a Cadillac, but certainly big enough to pile in two adults, three or four kids, and a trunk full of luggage, and it was fast enough to cruise on the Interstate at 80mph all day long. They were competitively reliable and when they did need repairs, they were simple enough that just about any service station mechanic could get it back on the road. In a nutshell it was a good value, a family car with some power and style.

In 1966, Chevy used four different nameplates for its fullsize cars. The more expensive models gave customers the options and stylish trim they wanted without getting too far away from the value of the base Biscayne. They were, after all, buying a Chevy, not an Oldsmobile or Buick.

Today only the Impala name survives. An SS package is still available, giving customers the option of a 303 hp 5.3 liter V8, a better handling suspension package along with the de rigeur 18" chrome wheels and SS trim. With fuel injection and electronic ignition it starts more reliably than the 1960s car, gets comparatively outstanding gas mileage, and even with that V8 sitting over and powering the front wheels it is a much better handling car than the '66. The '66 barely had seatbelts. The '09 comes with a plethora of air bags, air curtains, collapsible steering columns and crush zones. Instead of an AM-FM 8-Track stereo, the '09 Impala has surround sound, satellite radio and On-Star. By any measurable standard except for 0-60 time, the 2009 Impala SS is a superior automobile to it's 1966 antecedent.

So why does a 1966 Impala SS fetch strong auction money while the 2009 Impala is relegated to rental fleet duty? Because the current Impala is a boring car. I often find myself defending the Impala or Chevy Cobalt since they are perfectly adequate cars, if not class leaders. Still, they are boring cars with little about them that evokes any passion. Adequacy rarely evokes passion.

While a car buff in 1966 could have distinguished an Impala from a Bel Air just by the trim, today's fullsize Chevy has such nondescript styling that even a car guy like me sometimes confuses the Impala with its midsize stablemate, the Malibu. All of the big Chevys were and are instantly identifiable as Chevys. Fords, Chevys and MOPAR products had styling that was hard linked to their brand. That link between brand and styling is no longer. If you took the badges off, could anyone not a car buff be able to tell an Impala from a Sonata?

Who's to blame? Toyota. Well, more accurately, Detroit trying to imitate Toyota. The Camry is a very competent transportation appliance but nothing about it is exciting. Even the tuner rice rocket boys turn their noses up at the maytagmobile. There are probably more than 20 tuned and winged Tercels for every Camry that's been hopped up. Detroit sees people buying Camrys and Accords by the half milion and rather than going with their strengths, the domestic automakers say, "yeah, I can hit that" and end up making another boring car. Under "what's new for 2009" for the Impala, bullet listed along with the 18" wheels and standard 4 wheel disc brakes with ABS, is "revised cup holder design". Call me crazy but I don't think anyone ever got excited about a cup holder.

Detroit forgot what its mojo was and then tried getting it back by imitating the competition. The question then is does Toyondissandai have mojo? Yes, but it's not the same. Detroit's mojo was once an amalgam of style, size, speed and value. Toyota's mojo is reliability, boring reliability. While the Asian manufacturers are capable of making a Civic Si or a Sentra SER, you'll never see a Camry get the Biscayne>Impala SS treatment. Toyota thinks the market wants a boring maytagmobile and everyone else, chasing the Camry, queues up in the same line. Cars that evoke passion are the opposite of appliances. To inspire passion, positive or negative, you have to take a stand, take a chance. Toyota doesn't take chances.

As long as the domestic automakers see the Camry and the Accord as their benchmark for what consumers want, Detroit will never get its mojo back. There are, however, hopeful signs. It's been slow in coming, but the domestic automakers, or at least GM and Ford, have recognized that a "me too" copy of the Camry or Accord isn't going to win back market share. They have to somehow leapfrog the competition. Since technology is pretty much the same from automaker to automaker, and since they all know how to implement statistical quality control, quality is less and less of a distinguishing characteristic, so it gets harder and harder to make your product different and better in the eyes of buyers.

So what's Detroit to do? Go back to its strengths. Euro design houses like Pininfarina and Italdesign notwithstanding, automotive styling was pretty much invented in Detroit by Harley Earl and Edsel Ford. There's nothing wrong with a maytagmobile, but giving an appliance some style is one way to make it stand out in a crowd of white enamel. As long as the substance is there, there's nothing wrong with a little style.

There's no question that there are talented designers in Detroit. GM particularly has raised the bar on exterior and interior design. Cadillac's "art & science" design language has been very successful and its no coincidence that the Cadillac CTS is regarded by Detroit boosters and critics alike as proof that Detroit is capable of building desirable cars. The CTS is instantly recognizable as a Cadillac, a very good looking Cadillac. If GM decides to make an upmarket version of the Chevy Volt, it could do much worse than the Cadillac Converj concept, a very pure distillation of Cadillac's styling cues.

Ford also seems to have some focus on style. While its critical to their survival to federalize some of their small Euro cars, the heart of the sedan market will remain midsize and fullsize cars. Even before hybrid sales collapsed with the financial crisis and cheaper oil, Toyota sold more than twice as many Camrys as Priuses. Ford's decision to restyle the 2010 Taurus, taking it from a boring albeit competent sedan, to a distinctive upmarket look, will set it apart from the bland competition that includes, yes, the Impala.

GM & Ford Are Testing Consumers For Blowback On Government Loans

noreply@blogger.com (Ronnie Schreiber) — Wed, 14 Jan 2009 14:00:00 +0000

The North American International Auto Show (NAIAS) in Detroit, with thousands of reporters present, is a unique opportunity for company executives to get their message out. Or, in the case of Toyota president Katsuaki Watanabe this year, avoid the NAIAS and a barrage of questions about Toyota's first fiscal loss in 70 years.

When the CEOs do attend, the drill is usually the same. After the product introductions and press conferences, company personnel are available on the stand for questions and photographs. If you're high enough up in the media pecking order PR folks will schedule private interviews, but for most journalists the press conferences are the only chance to ask an honest question. Whether you get an honest answer is a different story.

Even though there's access, it's still a challenge. After the reveals, reporters and photographers are invited up to the stage. Concentric circles of reporters, cameramen and audio operators with their sound booms quickly surround CEOs and high profile execs. By the time the crowd thins out enough to try to get in a question, the executives' PR handlers are busy hustling them out. This year, with all the attention paid to the domestic automakers' troubles, the crush of reporters was even greater than normal. The crowds were so deep that you'd be lucky to get a photo of the top of Rick Wagoner's or Alan Mulally's head. If you strained you could hear their answers, which is great for background but not very helpful if you're pursuing a particular angle for a story.

On advantage of the NAIAS is that it takes place in Detroit, headquarters of the domestic automakers. Besides their CEOs most of the other high ranking executives are at the show. If you can't get close to a CEO, there are presidents and VPs aplenty. At the GM event I waited patiently while GMNA president Troy Clarke explained to the Automotive News that GM's focus would be on the Chevrolet, Buick, Cadillac and GMC brands and that they were in "daily talks" with their Saturn dealers. Not exactly a good omen for the Pontiac and Saturn nameplates. When it was my turn I mentioned consumer blowback over the government loans, that people are saying they won't "pay GM twice" and will boycott their products. I asked Clarke that since Rick Wagoner alluded during the congressional hearings to testing consumer reaction to a Chapter 11 bankruptcy, did GM also test how consumers would react to a government bailout? Was the decision to ask for loans based on a less negative consumer reaction to government assistance than to a bankruptcy?

Clarke avoided addressing government loans as the lesser of two evils in terms of consumer reaction. He did, however, say, regarding consumer blowback over the loans, "we are testing for that now." If you notice, GM did not follow Chrysler's example of spending millions on 'thank you America' newspaper ads. No doubt GM is aware of the overwhelmingly negative reaction to those ads and is treading gently with its marketing efforts.

Over at the Ford display there was more evidence that Ford "gets it". After the press conferences were over, while GM was sequestering its executives in private interview booths, Ford had them out in their display schmoozing reporters. To be sure, there was always a PR minder within earshot, just in case the wrong question got asked, but the easy access to Ford executives did not go unnoticed. Jim Farley and Jennifer Flake are doing their jobs well.

Mulally was busy doing tv interviews, but Mark Fields, Ford's president for North America was available. First I asked him about the consumer blowback that GM and Chrysler now face and if Ford's decision to avoid, for now, asking for money from the Feds was influenced by consumer testing on that issue. Fields, who is as slick as they come, went into spinmeister mode. He said that they do focus group testing on a weekly basis and continuously monitor the Internet for consumer reaction. Though he avoided directly answering my question, my impression is that FoMoCo knows very well that many consumers are negatively reacting to bailing out Chrysler and GM. While Ford has publicly supported those loans to their competitors, there's no question that they want consumers to distinguish them from the other domestic automakers.

At the same time that Ford wants to distinguish itself from GM & Chrysler, it wants to be sure that Uncle Sugar isn't treating them like a stepchild. I asked Fields if Ford thinks that GMAC getting access to additional TARP funds gives GM an "unfair competitive advantage". He replied that Ford Credit was structured differently than GMAC, which is now a bank holding company. Fields said that Ford had no plans to turn Ford Credit into a 'bank' to be eligible for TARP funding, but that Ford would not "want to be disadvantaged".

Fields' and Clarke's answers illustrate the tightrope walk the domestic automakers must maneuver. They must take the steps they feel they must take in order to survive. At the same those actions carry the risk of negative consumer reaction. Wagoner, Mulally, Fields, Clarke et al are well compensated. Their jobs, though, are such a headache these days that you couldn't pay me enough to do them.

Pulitzer Winner Dan Neil & Tesla CEO Elon MuskSociety of Automotive Analysts Forum

noreply@blogger.com (Ronnie Schreiber) — Wed, 14 Jan 2009 06:53:00 +0000

"A car show on steroids." That's how I describe the media previews of major auto shows to car enthusiasts. Exotic and ultra luxury cars that are roped off during the public days are accessible to members of the press. You can, if you have media credentials, try on a Lamborghini for size or a Bentley for style. Instead of attractive "product specialists" repeating memorized lines, you can talk "inside baseball" with the designers and engineers who actually create the latest concept or production vehicles. For a relative bottom feeder in the journalistic food chain like myself it's the only opportunity to question company CEOs and other high level executives one on one. It's also an opportunity to rub shoulders and share ideas with notable automotive journalists.

A number of automotive related organizations use the occasion of the NAIAS to organize forums and seminars. This year the Society of Automotive Analysts hosted an event called Navigating Turbulent Times at the RenCen Marriott, down the street from Cobo Hall. Along with analysts from J.D. Power, Deutsche Bank, Ford, and NADA were Pulitzer Prize winning auto journalist Dan Neil and Tesla Chairman Elon Musk.

After the economists finished with their PowerPoint presentations, Dan Neil warmed the crowd up for Musk's keynote talk with some provocative comments and his own brand of irreverent humor. He referred to some of the cliches about the current automotive crisis and offered his own, "shit storm". Neil said that at least one of the domestics will be in bankruptcy while he partly defended Detroit when he said, "if it was about who is smart and who is trying, nobody would be in trouble." Southeastern Michigan, he said, has huge potential just under the surface of the ice, with a large trained and educated workforce.

Neil called for "nationalizing" General Motors. Have the Feds just buy all the stock. He said it'd be cheaper because GM etc. will only be back for more money.
The government taking over the biggest domestic automaker would allow abrogation of contracts. At the same time, Neil said that unions are being scapegoated.

It's interesting that Neil wants the government to take over GM. He says that the government want two contradictory goals. The Feds want financial viability while they also want the domestic automakers to manufacture hybrids and electrics that aren't going to be profitable. He thinks the problem is long term, maybe five years out, and has no market solution. The government should buy GM, turn it around and flip it for a profit.

To make those hybrids and electrics succeed in the market and to avoid the havoc with product planning and sales that gasoline price fluctuations have caused, Neil advocated an increased federal tax to create a price floor on gasoline. I suppose that if the government is going to tell GM and the other domestic car companies what kinds of cars they have to make, it's only fair if the feds have a tax policy that makes it more likely to sell those cars.

Finally, as an employee of a legacy media company that's bankrupt, Neil remarked on the irony of a newspaper writer discussing the auto industry. I'm not sure, though, that he was correct when he described newspapers as "almost as bad off as automakers". The domestic automakers are at least competing with other automakers that charge for their products. The newspapers are competing with eBay, Craigslist and blogs, which don't charge their readers. Buggy whip manufacturers better describe legacy newspapers than the domestic auto industry.

After Neil warmed up the crowd, Musk started his presentation with a promotional video about the Tesla Roadster. His speech was also pretty much promotional, glossing over challenges the company faces. He said that the company will reach profitability in mid 2009 when the company increases it's production rate to 30 cars per week from its current rate of 15. Tesla has reduced its cost of manufacture to the point where the Roadster is now profitable, Musk said.

The Tesla CEO said that customer response has been very positive, and that Tesla deliberately targeted celebrities as their first customers. Musk then name dropped a series of A list actors.

In terms of product news, Musk announced the Sport version of the Roadster, with a more powerful electric motor, will be available in the spring.

He said that work is proceeding on the Model S, described as a 5 passenger luxury sports sedan, which Musk said will have a MSRP of $49,900 after a $7,500 federal tax credit. Later other versions of the S will include a $100,000 sport version, extra capacity batteries and an AWD option. The Model S will be revealed at a Tesla function at the end of February with completion of the driveable prototype wrapping up now. He did allude to a slowing of the S project due to the "current funding climate", with Tesla now spending 10% of it's expenditures on the sedan, a drop from 30%.

Regarding the range issue of the S sedan, Musk said the current 45 minute fast charge is the limit of the current battery chemistry. He said that Tesla is working on advanced battery technology and will later offer battery packs in 150, 220, and 300 mile ranges.

While discussing the extended range batteries, Musk disclosed the fact that Tesla is working on a swappable battery, and may allow owners to rent long range batteries for extended trips.

While the Roadster can rely on current infrastructure, as EVs proliferate, Musk said that there is a need for fast charge stations at highway service plazas. He said that Tesla would not be involved in any infrastructure charging grids as long as other enterprises satisfy the need. Tesla instead is focusing on it's own home fast charger.

Tesla manufactures it's own battery packs and will be doing that both short and mid term. In terms of battery chemistry, Musk claims promising lab results using new carbon/silicon battery anodes. He maintained that Tesla's use of conventional cobalt or nickel based cathodes for lithium ion batteries is superior to alternative titanium oxide or iron phosphate chemistry, which Musk maintains does not have a high enough energy density.

Musk used the SAA forum to announce that Tesla's previously unnamed automotive partner is Daimler and that Tesla has been working with the German automaker for the past year and a half. Tesla will be supplying the battery pack and charger system for the electric Smart car, starting with 1000 units. If that initial fleet is successful, Musk talked of tens of thousands of units.

The first 1000 Smart EVs will be leased. Data will be gathered for a year or two and then "ramp up to high volume". When asked if Daimler is providing funding or technology, Musk had no comment.

The relationship with Daimler with the technology is not exclusive and Tesla is looking at other automakers for strategic partnerships, not a vendor relationship. They are looking for high volume vehicles (I assume, compared to 30 cars a week).

Since Musk was in Detroit looking business, he stressed how Tesla wants to work with the domestics and doesn't see themselves as part of a "Silicon Valley vs Detroit" fight. Considering how much embedded technology is in a modern car, that fight is fictional in any case, but Musk wanted to make nice with Detroit. He said they've had "discussions" with the domestics with nothing coming to fruition so far. They are still hoping to make a deal involving everything including motors, power electronics systems, software, and charge/temperature management, up to complete electric powertrains.

He said the overarching principle was the acceptance of electric cars, and focusing on synergizing building their own cars and partnering with other manufacturers. His advice to Detroit was to "make compelling products at a compelling price." He hopes the Chevy Volt will be successful but he said that the Volt's success "isn't clear."

When asked about cold weather performance, Musk referred to the Arctic Circle testing in Sweden video that circulated on the Internet as well as satisfied customers in Chicago and New York.

Concerning the possibility of battery leasing, Musk said that it does increase customer options.

Regarding the Zap electric car company, the Tesla CEO said that "Zap is not a company with a very good reputation. Our's is real. Tesla is an engineering and design company." Musk mentioned Franz von Holzhausen, designer of the Pontiac Solstice and more recently head of Mazda design in North America, who is heading what Musk called a "world class design team." Musk stressed that "excellence is a passing grade at Tesla."

Like Neil, Musk called for higher taxes on gasoline. He didn't address how higher gas taxes make alternative propulsion vehicles like Tesla's more desirable to consumers, preferring to use environmental reasons. He said the true cost of gas is not the price at the pump, that there is a tragedy of the commons, and that taxes on gasoline should reflect the true cost to the environment, perhaps a reference to carbon taxes. Musk predicted gasoline to rise to "$4, $5, maybe $7 a gallon within three or four years".

After the automotive analysts helped plot our course through these turbulent times, Musk navigated down to Cobo for the Tesla press conference. His remarks at the presser were a capsule summary of his SAA talk and then took questions from the few reporters that remained for the final press conference of this year's NAIAS.

Why a sports car? Electric cars are now expensive for early adopters, so a high end sports car makes sense.

He reiterated that Tesla would like one or two additional strategic partners besides Daimler, domestic or international. He stressed that he wished to work with Detroit.

Tesla is using the standard 18650 li-ion cell format because it has economies of scale. The S will also use 18650 cells. As production numbers go up larger format cells will get more economical and will be more powerful. Musk said that the ideal cell size is about ten times the size of the 18650.

When asked about the source of funding for the S sedan, Musk didn't mention any private sector funds, only $250 million in Title 170 funds that have "been more or less approved", and smaller amount from the "136" energy bill funding. He said that funding the S would cost Tesla $350 million, including $100 for a facility to produce powertrains. He said the S would go on sale in 2011 with an initial sales target of 20,000 units a year.

To his credit, Musk took all questions, saying no comment about receiving funding or technology from Daimler. After the presser was over up he hung around for quite some time, along with the other Tesla execs including von Holzhausen.

Franz is one of the best automotive designers working today in my opinion. He did some truly stunning concepts for Mazda, worked on the VW Beetle and designed the original Pontiac Solstice concept coupe. When asked why he went to Tesla he said that it will give him the opportunity to create a brand's styling language. At VW he worked under J. Mays, now head of Ford design, and at GM he inherited brand styling cues. Von Holzhausen said that he relished the opportunity for "uncompromised design" and wanted to make the S "aspirational vs. higher priced competitors."

With the Tesla booth right next door to a display of Loti, the head of Tesla design said the S will allow Tesla to move away from its image as the maker of an electric Lotus. The company isn't just looking at styling as a way of differentiating itself. Von Holzhausen said that because modern cars are designed around the platform and drivetrain engineering, the new EV and hybrid propulsion systems allows designers to rethink conventional layout and exterior design. With the reveal of the S class only a month away, the shape of the car is already pretty much set. As GM discovered going from the very attractive Volt concept to the more pedestrian looking production model, aerodynamics are a critical factor in the range of EVs and hybrids. I asked Von Holzhausen about the S sedan's coefficient of drag. He wouldn't give me a figure but when I asked him "under 0.3?", he laughed and said sure. By comparison, the Volt will have a cd of 0.27 and Toyota claims the 3rd gen Prius will have a cd of 0.25, so I hope Franz has the last laugh. Von Holzhausen seems genuinely enthused about Tesla and the S project.

Tesla's display in Detroit is partly due to the show organizers' successful efforts to fill the main show floor in tough economic times. The Tesla display's proximity to Lotus is ironic in ways different than just a shared platform. Lotus has thrived by selling its engineering expertise to larger automakers. Tesla was in Detroit to do the same. Tesla's presence in Detroit is also a reflection of the company's desire to play in the big leagues. After the Tesla press event was over, I saw Musk and his execs walking through the GM exhibit, pretty much unnoticed. Later, at the Tesla booth I kidded him and told him that Tesla will have arrived at as an automaker when reporters at the NAIAS follow him around.

Test Driving The Tesla Roadster in Cobo's Basement

noreply@blogger.com (Ronnie Schreiber) — Tue, 13 Jan 2009 22:45:00 +0000

When I go to the NAIAS, I like to get downtown early, around 7 AM. That way I don't have to wait in any lines for credentials and I can also get my favorite free parking spot about a block from Cobo Hall. While waiting for the press conferences to begin today, I stopped at the Tesla booth to say hi to Rachel Konrad, head of communications for Tesla. This is the first time that Tesla has displayed at the NAIAS. They had a small booth located, ironically, next to the Lotus display. There was a naked Roadster chassis laying the car's Lotus roots bare, but Konrad was emphatic that only a small percentage of components are shared with the Elise. She said that 150 Roadsters have already been delivered and that they are now completing 15 vehicles a week, with 1100 people on a waiting list. Their facility has an ultimate capacity of 40 cars a week. With 150 cars delivered, and production proceeding, albeit at a relatively slow pace, Tesla has grown their company beyond Tucker stage (50 units built). It remains to be seen if they surpass Bricklin (2854 SV1s) and DeLorean (~9000 DMC-12s) but in the meantime, they're building real cars. I know because I got to drive one.

To continue click on the link below. To read a revised version of this post, please go to The Truth About Cars

In addition to the chassis Tesla had a deep red Roadster on the stand. They were preparing to remove it and Ms. Konrad said they were taking it downstairs to Cobo's Michigan Hall. With six automakers pulling out of the NAIAS this year, there was a lot of empty space in the basement so the Michigan Economic Development Corp. sponsored what they like to call the EcoXperience. It's a 700' track laid out in a winding loop around a park like setting. Public show goers will get rides in the latest hybrids and alternative propulsion concepts. The track was also available for test drives during the media preview.

Apparently the US State Department had organized a meet and greet for international journalists with top Tesla executives, and Tesla decided to give the journalists a spin in the Roadster. Konrad told me that I was welcome to join in. I checked the schedule and decided that a drive in a $100,000 electric sports car was more important than seeing the introduction of the Lincoln MKT crossover.

While waiting for everyone to show up, Mike Donoughe, Tesla VP of engineering and manufacturing, was running laps at a pretty good clip considering it's an indoor, one lane, track. I'd estimate he was doing about 20 mph, definitely much faster than the suggested 10 mph limit. When they queued us up, I was second in line. I had jokingly suggested to Konrad that they put the Roadster on "valet" setting to keep the journalists from testing the 0-60 time, but the car was on standard settings.

Getting into the Tesla Roadster is not an easy task because of the wide stepover shared with the Elise. I was pleased to discover, though, that it's much easier to access and exit a Tesla than the Lotus. That's because it has sills that are 2" lower than those of the Elise. Brief instructions: foot on brake, release handbrake, shift from neutral to drive, foot off brake and on accelerator. Obviously, a low speed drive around an indoor course isn't going to tell you much, but I had a blast. Between the torque and the Lotus derived handling, it was just a question of how fast I wanted to take the turns. Complete assurance that the car will go where you want it to go. The car is also remarkably quiet, with little noticeable whine or hum from the drivetrain. While the Tesla is surefooted, I was surprised that the steering felt a little heavy, a slight lack of feeling. The polished cement floor might have had something to do with that, or maybe it was the Roadster's extra weight vis a vis the Elise.

Like I said, you can't tell much from a "test drive" such as this, but with only 150 cars having been delivered, how many chances will I get to drive a $100,000 electric supercar indoors? The Roadster seems well screwed together and feels solid. The motor controls give a very normal pedal feel. This is a car not a golf cart. Tesla came to the NAIAS, I think, to show that they are a serious player in the automotive world. CEO Elon Musk is going to be in Detroit for a press conference at the NAIAS and a talk to the Society of Automotive Analysts.

That makes sense. In terms of actual automotive news, outside of talks of bailout loans and sales down 30% or more, the atmosphere at this year's NAIAS was "electric". Almost all the manufacturers were featuring production or concept vehicles using electricity for propulsion. Toyota introduced the 3rd generation Prius and the Lexus HS250h Lexus derivative. GM devoted an entire press conference to battery news. Ford, fresh on their boost from the EPA rating the Fusion Hybrid at 41 mpg city, announced their own electric vehicle plans including a battery electric commercial van, a battery electric small car to be jointly developed with Magna, and their next generation hybrids. Chrysler's showed their version of an electric Lotus, the Chrysler Circuit, a Jeep Patriot range extended EV, and the Chrysler 200C concept, also with a range extended EV powertrain. Even Tesla's former consultant and litigant Henrik Fisker was at the NAIAS to show the production version of the Karma and a concept of its two seat retractable hardtop variant.

So it made sense, as the most famous maker of electric vehicles, for Tesla to display at this year's NAIAS. Regardless of their motives, their presence gave me the opportunity to experience their electric sports car first hand. Who knows? Maybe next year the NAIAS will have quarter mile electric drag races down the main aisle in Cobo.

2009 NAIAS: There Ain't No Such Thing As A Free Lunch

noreply@blogger.com (Ronnie Schreiber) — Sat, 10 Jan 2009 03:21:00 +0000

Chrysler has made a tradition out of showy product introductions at the NAIAS in Detroit. They've driven a Jeep through a glass wall at Cobo Hall and a herd of longhorn cattle down Washington Blvd. Getting the attention of 6000 jaded journalists takes some creativity, and free food, and good booze, and eBayable swag. There's a "new reality" in Detroit these days, though. That's how Rick Deneau, director of Product, Brand and Sales Communications for Chrysler put it in a post on the Auburn Hills automaker's Firehouse media blog.

So let's say goodbye to all those Hollywood productions. Say hello to "straightforward" press events. Perhaps based on all the negative feedback on their Thank You America ads, Chrysler's marketers understand that they can't be perceived as wasting money. In any case, that's sure what they want the media to know. The blog post spends more time explaining to the journalists that they should expect few if any perks, than it does about the new vehicles Chrysler will introduce and how it will display them at the 2009 NAIAS.

Public show goers will surely miss the popular Jeep waterfall, but not as much as the journalists will miss Chrysler's other cutbacks during the media preview. No more office and interview space and rows of computers with free Internet access, and no swag like the djembe drums of yesteryear. Worse, Chrysler is literally saying there's no such thing as a free lunch. For years Chrysler's served a complimentary lunch to the horde of assembled reporters complete with an open bar (well, at least for beer). No more free lunch. Journalists will have to fend for themselves. Nissan, which served filet of beef last year, isn't sponsoring a factory display in Detroit this year so that won't be an option. Maybe VW will still fly in a Lufthansa catering crew from Munich like they've done in recent years.

Perhaps the cruelest cut is the fact that Chrysler will not operate the Firehouse bar & grill for attending media this year. The Firehouse, ironically the namesake of the blog that announced its own demise, and the attached cigar bar, have been popular after show hours hangouts for journalists and Chrysler personnel alike. The food was free and so was the well stocked bar, which was tended by Chrysler execs and celebrities. While it undoubtedly was a nice perk for media types and Chrysler marketing folks, perhaps the biggest loser will be the Detroit Firemen's Fund. The Firehouse was set up on the first floor of the old downtown fire station. While the food, drink and cigars were free to those with press credentials, tips went to the Firemen's Fund, and Chrysler's corporate foundation always made a large contribution as well. Last year Chrysler put $25,000 into the fund to restore a 1937 Seagrave Safety Sedan, a vintage fire pumper, that will be used as a catafalque for fallen firefighters.

Other manufacturers, I'm sure, will cut back on their media presentations. I don't know how much it will help the domestic automakers or their foreign competitors but they have no choice. None of them can afford to be seen as wasting money wining and dining reporters. It's possible, on the other hand, that some kind of competition for which automaker wears the coarsest hairshirt may end up with cynical reportage.

Rick Deneau said there'd be "Less glitz and no giveaways. These are unfortunate but necessary steps to help return Chrysler to a solid footing. And with the government loan to help Chrysler bridge the financial crisis, it’s the right thing to do." After the negative response to their Thank You America ad, Chrysler knows that their critics will seize on any expenditure that can be somehow portrayed as wasteful. That doesn't help the people formerly paid with those expenditures. Like the general aviation industry that winced as congressional gasbags bloviated about private luxury jets, I'm sure that catering, video production companies, and other people that have worked the media days at the NAIAS are not thrilled about "straightforward" and "efficient" press events.

Some of the Chrysler reveals were indeed over the top. Watching Kermit the Frog pitch green Lincolns with Magic Johnson approaches the surreal. Still, I'd hate to see the product introductions at the NAIAS, or any auto show media preview, turn into the kind of sterile presentations Porsche likes to give - some guys in suits droning on in Cherman accents. Forget the Cayenne intros. The Porsche guys put me to sleep when they were introducing the Carrera GT. Surely there is some middle ground between wretched excess and boring speeches.

With sales 30-40% down for just about all brands, the near bankruptcy and bailout of GM & Chrysler, and Toyota & Honda now losing money, this NAIAS will be under a microscope. Regardless of who brags about saving the most money, I think the automakers that address the challenges they face in an honest way and present a viable path forward and relevent new product will get the most favorable coverage.

California Will Be Bankrupt Before General Motors

noreply@blogger.com (Ronnie Schreiber) — Sun, 04 Jan 2009 22:52:00 +0000

Turkey was once known as “the sick man of Europe.” Michigan fills a similar role in the minds of many Americans, a basket case of a state on the edge of a financial precipice. This has been the popular view of Michigan for at least 20 years, since Michael Moore’s “documentary” Roger and Me portrayed Flint as devastated by GM’s efforts to modernize the giant automaker.

Michigan’s image is that of an economic disaster zone, filled with decaying cities, greedy unions, stupid companies, and general incompetence. Many city and county governments are distressed financially, and the business climate is, to say the least, not improving. The city of Detroit is deeply in the red, has failing schools, and has the highest unemployment and poverty rates in the country; entire swatches of the city are turning into urban prairie with foxes, coyotes, and other fauna. Among conservatives particularly, the state’s image is that of a solid blue Democratic bastion of high business taxes and intransigent unions, whose businesses now want to violate free market principles instead of failing according to capitalism’s theory of creative destruction. Political liberals with their environmental sympathies aren’t much friendlier. During the recent congressional hearings on aiding the automakers, both sides of the aisle got their licks in.

The truth is that despite the doom and gloom Michigan is a well-run state, financially and otherwise.

Read the rest of this post @ Pajamas Media

Automotive Darwin Awards

noreply@blogger.com (Ronnie Schreiber) — Sun, 04 Jan 2009 22:50:00 +0000

There are all sorts of end of the year lists. The ten best this and the ten worst that. I think my favorites are the Darwin Awards given to those who improve the gene pool by removing themselves from it. Cars are indeed safer today then they have ever been but people are still people and a few of this year's Darwin's involve cars or trucks.

Read the full post @ The Truth About Cars

Ultimate Barn FindThe Most Valuable Car Ever?It Pays To Be Nice To Your Relatives

noreply@blogger.com (Ronnie Schreiber) — Fri, 02 Jan 2009 19:37:00 +0000

Automobile enthusiasts have all heard the stories. They usually go like this: a visitor to an elderly farmer is poking around a barn and under a tarp finds an original condition, low mileage Shelby GT-350 Mustang, stored there since the farmer's son got shipped off to Vietnam, never to return. The "barn find" is often an urban legend, akin to a spurned wife selling her ex's Porsche for $50.

Apocryphal though most of these stories may be, some of them turn out to be true.

Car and Driver magazine once ran a story about an unidentified American car collector who found an Aktion P armored 540K Mercedes buried disassembled in a series of barns in the former Soviet Union. It was one of twenty armored 540Ks that Hitler commissioned after the May 1942 assassination of Reinhard Heydrich, one of the architects of the Holocaust and governor of Nazi-occupied Czechoslovakia. Though that specific car has never come to auction, in 2007 Mirbach, a German classic car dealer, offered one of Hitler's own armored 540Ks for sale at an asking price of £1 million. Mirbach currently, by the way, is offering a non-armored 1940 770K parade car with an "interesting history with the German Reich". It's described as "A collectors item with high level historic importance and a possible use inside the parameters of restricted representation...", ellipse in the original description, a discreet reference to German laws prohibiting displays of Nazi artifacts.

Now comes the story of an even more valuable "barn find" with a far more savory history, a 1937 Bugatti Type 57S Atalante, one of only 17 ever made, still in original condition, having been parked in a garage in 1960 with only 26,284 miles recorded on the odometer.

The Bugatti came to light upon the death of Dr. Harold Carr, a successful British orthopedic surgeon. The ironically named Carr had no children and his nephew found the Bug while sorting through his belongings. It was a daunting task as the good doctor was a bit mad, a hoarder suffering from obsessive compulsive disorder. Hoarders have a pathological inability to throw anything away. It's said that Greenfield Village and The Henry Ford museum grew out of Henry and Clara's obsessive hoarding. The basement of their estate, Fairlane, was shoehorned with items by their staff because the frugal Fords refused to discard even packaging. Barbecue charcoal was developed by Ford (hence Kingsford) so that the wooden crates commonly used to ship auto parts would not go to waste.

I have a little personal experience with the disorder as I've tried to clean the home of a relative who is a hoarder. Though the image of hoarders is of homes filled with pets and pet waste or stacks of newspaper piled to the ceilings, what's not typically realized is that amidst the refuse are often items of great value. Hoarders save everything, not just junk. That's why cleaning up after them is such an arduous task, you have to go through all that junk with a fine toothed comb lest you miss jewelry, uncashed checks or, as in the case of my relative, a pristine in-the-box Fisher Price "Nifty Station Wagon" circa 1962.

Along with the Bugatti, amidst decades worth of receipts, heaps of medical equipment, 1,500 beer steins, and a WWII era spy drone (Carr was also a pilot), his relatives found a restorable vintage Aston Martin and an E Type Jaguar that was not salvageable.

While that Fisher Price station wagon is a neat collector's item, it's not nearly as valuable as an original condition Bugatti. In addition to the 57s' inherent rarity (one of 15 extant) and value, it also has historic provenance. It was originally purchased by Earl Howe, the first president of the British Racing Drivers' Club. Howe was a close friend of Ettore Bugatti and raced his cars. With a top speed of 130 mph, the Bugatti 57s could accurately be described as one of the first supercars.

Relatives of Dr. Carr have consigned the Bugatti to Bonham's auction house, who will put it on the block next month in Paris. While Bonham's has not put an estimate on the Bugatti's value, it has a reserve price of £3 million ($4.33M USD). Some analysts believe it could fetch as much as $8.5 million, making it the most valuable collector's car ever.

Though a previous owner had fitted the 57s with a Marshall supercharger, the car is still 99% original, presenting possible purchasers with the difficult choice of restoring it or keeping it in as-found-in-a-garage condition. With original condition cars it's always a debate whether they are more valuable as-is or restored. While cars like this are way, way above my pay grade, if it was mine I'd just clean it up a bit, get it in running condition and maybe replace the supercharger with a genuine Bugatti blower. Any appropriate level restoration would not be cheap and should the purchaser decide to eventually sell it, it would probably be more profitable to leave it more or less as parked by Dr. Carr in 1960.

Most memorable ride of the year (decade?)

noreply@blogger.com (anoldbikeguy) — Wed, 31 Dec 2008 16:47:00 +0000

As many of you know who have seen me replying on other sites, I am somewhat of a car nut (massive understatement). Therefore, you would likely assume that the most memorable ride in a vehicle this year would be in one that I actually drove -or at least rode in the front seat, right?

Amazingly enough, not so! And it wasn't in an ultra high horsepower vehicle or one with outstanding handling prowess or any of the other class leading attributes that I would normally value (and I had rides in a few of those as well). The ride lasted maybe five minutes, never got over about 15 mph, there were no high dynamic maneuvers - and I rode in the back seat!

I don't know how many of you are familiar with the DARPA challenge - it was not covered much by the MSM in this country, although in many other countries it was highly covered.

Essentially, the DARPA challenge is to have a vehicle that can drive by itself - no operator, no remote control. Maneuvering is done by utilizing downloaded GPS intermediate co-ordinates to one or more high horsepower computers; there were ten duo-cores in all, then using various sensors like radar and lidar, as well as digital cameras, the vehicle (essentially a gas powered robot at this point) is given a start command and goes about the tasks involved to get to each GPS checkpoint. While following all traffic laws, including speed limits, stop signs and traffic lights. In a city environment with traffic that consists of other robots, human driven vehicles and obstacles.

And I got a ride in the vehicle that won!! By twenty minutes! How cool is that? The winning team, Tartan Racing, led by the Carnegie Melon University Robotics Institute, had three major development partners, GM, Caterpillar and Continental, all of whom had resident engineers at Carnegie Melon throughout the program. I was asked by one of the partners if my company would like to become a sponsor and provide some development assistance. Our senior management thought about that for maybe five seconds and said "absolutely".

As a sponsor, we were invited to come to a special event that was held at the GM Technical Center in Warren, Michigan. We met several of the key people from Carnegie Melon, had an extremely interesting technical presentation by Professor Red Whittaker - a fascinating gentleman to talk to then off to the parking lot to get a close up look at the winning vehicle - and get a ride.

In the vehicle front seat were two Tartan Racing team members. We were told to buckle up, they pulled out an E-Stop button and we were off. The Boss (hugely modified Chevy Tahoe) named after Boss Kettering as in Kettering University put itself into drive, and started driving around the perimeter of the parking lot. We came to a stop sign which Boss stopped at and waited its turn while another vehicle entered the lot. Then Boss weaved through a number of cones (that were moved several times during the demonstration) came back to the beginning position, parked, and turned off.

Now,I have been involved with high technology for a great deal of time and have seen and helped develop a lot of fun stuff over the years, but this to me was, WOW time! The sheer level of technology and innovation involved in this winning effort is simply astounding.

If you are interested in learning more about this I encourage you to visit:

http://www.tartanracing.org/

Big Brother is here and his name is Gov. Ted Kulongoski

noreply@blogger.com (Ronnie Schreiber) — Wed, 31 Dec 2008 00:37:00 +0000

Big Brother is here and his name is Gov. Ted Kulongoski, the Democratic governor of Oregon. He wants to know where you go and when so he can tax you by the mile and keep Oregon green.

In the governor's transportation plan that brags of creating jobs to build roads and bridges the main focus seems to be to make sure those roads will not be used. In Oregon it seems that people drive too much. The plan talks about "congestion", "bottlenecks", "greenhouse gas", "carbon", "green standards", "non highway programs" and "incentive programs designed to reduce the number of cars on our roads."

The governor knows that cars and how people use them are changing. People are driving less and using more fuel efficient vehicles. Cars that use alternative energy like hybrids and EVs are going to be a significant part of the automotive fleet. The problem that the governor has is that that states pay for transportation funding with taxes on fuel. The less diesel and gasoline that drivers buy, the less tax revenue to the state. Electrics and hybrids get their electrons from the grid, not a pump that the state's weights and measures department can tax.

Since everything else in the governor's transportation plan doesn't generate revenue, and things like non highway projects, pedestrians and bicycles, light rail and mass transit require subsidies, the money has to come from drivers. Kulongoski has a problem. How to get people to drive less and pay more. How to tax drivers? His solution? Tax them by the mile. I'm sure to the governor it makes perfect sense. Taxing by the mile will discourage "discretionary trips" and if the state makes the per mile rate high enough they can both generate tax revenue and use that rate as a tool to control how much people drive.

Click on the link below to read the rest. A different version of this post can be read at The Truth About Cars.

There's no inherent problem with taxing by the mile, in fact the tax on fuel is intended to do roughly the same thing. The problem how the governor wants to control people's behavior at least as much as he needs to tax them. He wants people to drive less. So he's putting a green smiley face on a rather Big Brotherish intrusion on privacy and make sure they drive less - and pay more per mile.

Last year the Oregon DOT announced a successful demonstration that a GPS based system in cars could be used for the purposes of collecting mileage taxes. Now Gov. Kulongoski wants implement that system and have your car to spy on you.

Transition Away From the Gas Tax: As Oregonians drive less and demand more fuel efficient vehicles, it is increasingly important that the state find a new way, other than the gas tax, to finance our transportation system. The Governor proposes continuing the work of the Road User Fee Task Force – which will begin to partner with auto manufacturers to refine technology that would enable Oregonians to pay for the transportation system based on how many miles they drive"

"Partner with auto manufacturers to refine technology." Orwell is spinning some serious RPMs. The idea, though, doesn't have it's origins in Orwell, rather, but rather the California Air Resources Board and its OBD-II regulations for carmakers. The system diagnosed and recordd problems with cars emissions systems. To more efficiently test cars and identify those that are polluting, the proposed OBD-III specs are based on the idea that linking on board emissions diagnostic data with telemetry so only those cars that polluted would have to be tested. The original idea was to have road-based sensors so that drivers could be notified to bring their cars in for testing and repair, but satellite based technology is more practical now.

When OBD-III was first announced the implications for privacy and possible Fourth Amendment violations were obvious. Random mass surveillance is what police states do. Since Gov. Kulongoski is a dedicated environmentalist I'm sure he has no problem with OBD-III, but now he wants the taxman to get in on the act. By using GPS, satellite communications like On-Star, and other on board sensors this takes the search and seizure and self-incrimination implications a quantum step beyond. Kulongoski wants to know where you go and when and he wants the car companies to help him find out.

Police departments now routinely use cell phones to track suspects. California wants your car to tell them if it's polluting and now Oregon wants your car to report you to the treasury department. Where will it stop? At this point, on board electronics can record where you go, how fast you travel, whether or not you've stopped at intersections, g-forces, acceleration, virtually all the data the state could need to retrace your exact movements.

Perhaps along with your tax bill, Gov. Kulongoski will send you an invoice for traffic violations. Since red light cameras can issue violations with no complaining officer this seems like the next logical step.

One of the typical challenges to civil liberties concerns is that if you're not doing anything wrong, you shouldn't mind the occasional illegal search and seizure now and then. Only guilty people have something to hide. Now the governor of a state wants his state to know everything about the travels of anybody in the state. Frankly I find that more disturbing than if the government wants to loan money to failing auto companies.

Oh, and by the way, in the meantime Gov. Kulongoski wants to raise the gas tax 2 cents a gallon.

Would A Guaranteed Resale Price Help DetroitHarley Guarantees MSRP Trade-In

noreply@blogger.com (Ronnie Schreiber) — Sun, 28 Dec 2008 04:50:00 +0000

The Detroit automakers have a steep hill to climb. Even if they avoid financial meltdown and liquidation, and the challenge of coming up with world class product across their full lines, their still is the problem of their shrunken market share and how to attract customers who haven't considered domestic brands in years. You've read or heard the stories. Someone has either bought or had a family that bought a POS car or a series of them from the Big 3, switched to an import brand and overwhelmed with their reliability and value never has stepped foot in a domestic showroom since. Sometimes I think that had as many families bought Japanese cars 30 years ago that say they did their market share would have been much higher then it actually was. It's undeniable though that a combination of the Big 3 screwing up and the import brands doing well has resulted in a large fraction of the market that is convinced that Detroit can't build a good product and back it with good customer service.

One way the domestics have alienated buyers was through fleet sales, often to captive rental car companies. While it kept sales numbers high it wasn't very profitable and resulted in depressed resale values for their retail customers. A while back I suggested to Peter Delorenzo that the Detroit automakers could use a guaranteed resale value and it looks like Harley-Davidson is trying that out with a new promotion. If you buy a new '08 or '09 H-D Sportster before the end of March, you'll get full MSRP value if you trade it in within a year on one of Harley's Big Twin or VRSC bikes. What's interesting is that they're also offering MSRP trade in value on any already purchased 2007-2009 Sportster that's traded in on one of the more expensive Harleys.

H-D can afford to do this because their bikes do indeed hold their value, at least they did until the current financial meltdown, but before Wall Street screwed up the demand for new Harleys was so high used models were selling for almost as much as new ones. Still, there is some risk so H-D is probably managing the program as they would warranties.

There's no reason why it couldn't work for the domestic automakers. It's really not a new idea, dealers have used trade-in value promotions to sell new cars probably since car dealers and trade-ins began. It would immediately raise actual resale values. Some owners won't trade them in on the same brand, but with that as an option they'd demand more money from used car buyers or non brand dealers.

Detroit has to get very smart and very good very fast. Obviously the same old way of doing business can't last. Hyundai bought back customer loyalty after entering the US with cars of dubious quality with a 10yr/100K warranty. Before that, when Chrysler was bailed out the first time, Lee Iacocca used a 7/70 warranty to convince buyers that K-cars were worthy. At this point, I think the warranty idea is a bit played out so maybe a resale value promotion would be attractive enough and novel enough to catch consumers' attention.

Will Ceberus Give Chrysler to the UAW?

noreply@blogger.com (Ronnie Schreiber) — Thu, 25 Dec 2008 22:55:00 +0000

With the news concerning the Detroit automakers flying fast and furious, sometimes things slip under the public's notice. Missed in the hubbub surrounding President Bush's announcement of loans to GM and itself last Friday, on the same day Chrysler and Cerberus made announcements about personnel and other developments that would normally have gotten much more attention on a slower news day. One of those announcements was a potential bombshell: Cerebrus floated the idea of offloading Chrysler to the UAW.

First the personnel changes. Jim Press wasn't the only high profile Toyota employee that Cerberus persuaded to join Chrysler. Only sixteen months ago Deborah Meyer, who headed marketing for Lexus for six years, with a prior stint at Ford, working on Lincoln, Mazda and Ford do Brasil, was hired to manage the image of the struggling Auburn Hills firm. Her hiring was considered a bit of a coup at the time. Meyer's success at Lexus had made her a marketing superstar and Chrysler even created the executive position of Chief Marketing Officer for Meyer, also naming her VP. Now Meyer is gone and so is the CMO position. . The press release from Chrysler said that Meyer was leaving Chrysler "to pursue other opportunities". The Detroit 3 have had a lot of refugees lately so Meyer could be jumping ship before it goes down. Alternatively she may have been pushed out due to a disastrous year as Chrysler's public image has been battered.

Meyer's responsibilities were consolidated with Steven Landry, Executive VP – NA Sales, Marketing and Mopar Parts and Service, and Michael Manley, Executive VP – International Sales and Global Product Planning Operations.

While observers have long expected Cerberus to try and extricate itself from the Auburn Hills automaker, the bombshell that Cerberus might just give Chrysler, in part, to the UAW was not on anyone's radar. Cerberus slipped that posibility into their news release applauding Treasury's action to offer the domestic automakers help with loans from the TARP fund. Farago commented on Cerberus' offer, sincere or not, to invest $2 billion from Chrysler Financial into the parent automaker. However, buried in the same paragraph was this juicy nugget:

In addition to this, Cerberus believes that concessions by all relevant constituencies will be required to facilitate a full restructuring and recapitalization of Chrysler. In order to achieve that goal Cerberus has advised the Treasury that it would contribute its equity in Chrysler automotive to labor and creditors as currency to facilitate the accommodations necessary to affect the restructuring.

While a bondholder swap of debt for equity has always been presumed to be part of any restructuring of Chrysler, it appears that Cerberus wants to offload all of Chrysler to its creditors and employees. Whether those bondholders and UAW members will take the deal is certainly not clear, but it raises intriguing questions and some concerns.

Employee ownership is not a new idea. There are many examples of successful ESOPs, like W. L. Gore, makers of Gore-Tex waterproof materials. Unfortunately the experience of United Airlines and other ESOPs involving financially distressed firms may bode less well for UAW ownership of Chrysler. In exchange for large salary concessions, United's pilots, machinists, bag handlers and salaried employees acquired 55% of the company's stock in 1994. Not only was the value of that stock wiped out in United's post 9/11 bankruptcy, but the Ch. 11 reorganization completely cancelled the ESOP and forced the former employee owners to take yet further cuts in salaries. The company pension plan also defaulted.

A more recent large employee ownership plan is that of the Tribune Company, parent of the Chicago Tribune, Los Angeles Times, Newsday, Hartford Courant, Orlando Sentinel, and owner of superstation WGN and other newspapers, tv and radio stations, as well as the Chicago Cubs and Wrigley Field. Investor Sam Zell took the Tribune Company private in a complicated 2007 deal that involved the ESOP borrowing $250 million dollars to buy 100% of the common stock, while Zell put up the remainder of the money as warrants on 40% of the equity and a subordinated note.

The Tribune Company has struggled since the deal, burdened with $13 billion in debt from taking the company private and from the steep decline in revenues in the newspaper business. Drops in broadcast advertising revenue during the current recession, particularly from automakers and car dealers, have further distressed the company. Early in December of 2008, the Tribune Company filed for reorganization under Chapter 11. While the ESOP, in this case, was not funded from employee concessions or pension funds, whatever equity the Tribune employees had in the company is now worthless.

Like I said, UAW ownership of an automaker would be intriguing. ESOPs have their advantages, including better employee relations because of their proprietary stake. As Cerberus' press release stated, employee stock ownership would "facilitate the accommodations necessary to affect the restructuring." An employee owned Chrysler might also help negotiations for labor concessions at GM and Ford as well. Shifting employee and retiree health care to UAW managed VEBAs has made union members far more aware of the true cost of health care benefits.

As owners through an ESOP, the UAW might likewise more readily recognize the need for radical changes in their shop floor work rules, an important aspect of the domestic automakers' competitive disadvantage.

Shin Yoshikawa - Automotive Rennaisance Man

noreply@blogger.com (Ronnie Schreiber) — Wed, 24 Dec 2008 02:15:00 +0000

This guy is just way too cool for school. I saw an item on Jalopnik about a stunning aluminum reproduction of the classic Toyota 2000GT sports car by Shin Yoshikawa, now based in Lebec, CA.

Turns out, not only is he a master metal fabricator (there's a photo on his site of him at work on an English wheel, but I can't find it just now) and restoration specialist whose work is on display at the Toyota museum, he's a respected photographer and photojournalist, an author, and a car collector with great taste. He's so impressive that I decided to put this entire post on the main page, not just a taste and a link.

He's also a superb graphic artist, specializing in stunning cutaway drawings of classic sportscars.

I hear he plays a mean piano too. Oh, he also give seminars in metal fabrication.

Yeah, those are factory Nissan guys that he's teaching. He's also done work on the Shelby Daytona Coupe Superformance replica pictured below owned by Pete Brock, the Daytona Coupe's designer.

Plus he knew Soichiro Honda and Colin Chapman personally, and tried to buy Mr. Honda's personal 1st generation Lotus Elite. Like I said, the guy is off the charts cool and, it seems, very approachable. I'm hoping to interview him for a longer piece, maybe something I can hawk to one of the buff books. Yoshikawa-san is an automotive treasure.

Good News, For a Change, About DetroitHint: It's Not the Bailout

noreply@blogger.com (Ronnie Schreiber) — Sun, 21 Dec 2008 19:23:00 +0000

Last Friday was a good news day for Detroit. No, I'm not talking about President Bush's loan package that was announced today. That wasn't so much good news as a stay of execution with a case still on appeal. Perhaps the good news then must be reports that previously invicible Toyota and Honda are losing money and cutting production. Prius sales are down 50% so Toyota has suspended work on their proposed Prius plant in Mississippi and the company will have a loss this fiscal year, the first in 71 years. Toyota and Richard Shelby's "New American Auto Industry" suffering? That's normally a shadenfreude twofer for Michiganders but it really is just a reminder of how auto sales have tanked globally. Nationally it got lost in the news about the bailout and locally in Detroit it dropped to the bottom of the news - below genuinely good news out of Lansing and Detroit.

What kind of good news? This is the end of the year and the end of legislative sessions. The US Senate wasn't able to finish a deal on a Detroit bailout by the end of their session, leading to President Bush's loan package. The Michigan legislature, though, did manage to pass legislation funding projects that could help the city of Detroit recover economically. What got the most attention, both from the general media and from car folks was a $288 million dollar plan between the state, Wayne, Oakland, and Macomb counties, and the city of Detroit for the much needed improvement and expansion of Cobo Hall by 166,000 sq. ft. to a total of 866,000. This will provide more space for exhibitors, allow Detroit to keep the North American International Auto Show, as well as attract trade shows and conventions that passed on Detroit because of the size of Cobo or its older amenities. The newly renovated Book Cadillac hotel, now managed by Westin, is part of that same effort to increase Detroit's convention business. I know it sounds counterintuitive to those who believe that Detroit is a third world wasteland, but the primary obstacle to getting more conventions here hasn't been Detroit's reputation but rather a lack of hotel rooms downtown and a lack of floor space at Cobo.

In other development news, the legislature also funded a 3.5 mile light rail transit system to link the New Center area and downtown. This will also help in getting convention business, but the primary goal is to nurture the nascent development that has happened along the Woodward corridor in recent years.

Still, the NAIAS is the biggest trade show or convention held in Detroit and generates about $500 million in business for the region.

Speaking of the NAIAS, it hasn't been a good year for the Detroit show. Nissan/Infiniti and Mitsubishi dropped their factory displays and will instead support displays by their local dealer groups. Land Rover, Ferrari and Rolls Royce have pulled out entirely, notwithstanding the success of last year's "Gallery" program that gave hundreds of well-heeled guests from around the country a private showing and resulted in luxury marques selling about $3 million worth of cars. Earlier Porsche also decided not to display in Detroit this year because of its low sales in the region. In a speech to the Detroit Economic Club Joe Serra, senior co-chairman of the NAIAS acknowledged the "dire times" facing the auto industry but said that despite losing those six exhibitors, the total number of exhibitors on both floors will increase by two and there will be more world premieres than last year. The manufacturers who pulled out made space available to other companies who wanted in. That's shows how needed a Cobo expansion is, that even in tough economic times there's still demand for floor space at the NAIAS this year.

Still, the NAIAS will be a low key event this year. The NYT coined the cliché that you can tell how the domestic auto industry is doing by the size of the shrimp at the Detroit auto show media preview. The shrimp and other perks for the 6000 journalists in attendance will be few and far between this year. Chrysler will not have one of their showbiz introductions and all the manufacturers will have simpler displays. Only a few years ago GM and Ford were outdoing each with things like two story displays. Bottom line: fewer pretty girls, less glitz, and more focus on product and business plans.

That being said, that increased number of exhibitors includes some cars of particular interest to car enthusiasts. The Bugatti Veyron will make its first ever NAIAS appearance, and Lotus will have its first factory NAIAS display. Lotus is a much more substantial company than it ever was. The success of the Elise and derivatives, as well as Lotus' involvement in the development of Chrysler's EV sports car makes a NAIAS booth for Lotus a natural idea. Another technology partner of Lotus, electric car pioneer, Tesla, will have a factory booth with their roadster as well. This is also the first time Tesla will be showing at Detroit and Tesla CEO Elon Musk will be speaking to the Society of Automotive Analysts at a NAIAS related event on January 13, 2009.

Also in the electric car front, Chinese automaker BYD plans to use the NAIAS to introduce a serial hybrid with a 60 mile range on batteries. BYD produces about 25% of the world's cell phone batteries so they may have a leg up on other manufacturers' electric plans. China's Brilliance Auto will display for the first time and along with BYD will be the first Chinese manufacturers to display on the main floor in Detroit.

GM's turnaround is predicated on becoming the technology leader in electrically driven cars. To keep Michigan in the battery game with BYD and other battery developers, the state legislature also passed one other piece of legislation that got lost in the flood of automotive news today that may turn out to be the most significant item. That is, providing the bailout loans work and there is still a functioning domestic car industry.

The Michigan legislators on Friday approved a tax credit package intended to make the state a national center for the development of batteries for transportation. The bill will provide up to $335 million in tax credits from 2001 to 2016.

Cobasys, a joint venture between Energy Conversion Devices of Troy, MI, and Chevron produces Nickel Metal Hydride (NiMH) batteries for GM's current generation of hybrids. However, Chevron's association has raised the controversy that the oil giant may be using its involvement to suppress alternatives to gasoline. At this time the US has no large scale facilities making the advanced lithium-ion batteries that will be needed for the next generation of hybrids and electric vehicles.

Legislators and Gov. Granholm hope that the tax credits will allow Michigan to become the locus of battery development and production in the US and give state businesses access to the $1 billion the federal government is investing in battery research.
While it would be better if the news was about private sector investment instead of government funding. However many of Detroit's problems are at least partially attributable to the hand of government and it's nice to see state and federal government helping for a change instead of hindering.

The New Arsenal of DemocracyIf President Bush Used FDR's Speechwriter

noreply@blogger.com (Ronnie Schreiber) — Sun, 21 Dec 2008 19:15:00 +0000

Detroit has many nicknames. The "D", popular with the hip hop generation, the traditional Motor City, and later, Motown, where Barry Gordy mixed great American music to sound good on car radios. Some, like Murder City, perhaps a play on Motor City, are less endearing. One nickname for Detroit was adopted from one of FDR's fireside chats in late December of 1940. Europe was under the Nazi boot, Britain was at risk and Germany, Japan and Italy had formalized their alliance as the Axis powers. In that speech, Roosevelt explained the risk to the United States and our way of life, of democracy itself, in support of converting US industry to munitions and defense both to help Britain and defend the United States in case it was attacked from the east or from the west. "We must be the great arsenal of democracy," FDR said, and when Detroit turned from making cars and trucks to bombers and tanks, the region took on that name.

At a time when the president of the United States announces loans to allow the domestic auto industry to survive and reorganize, at a time when the domestic auto industry and Detroit faces an urgency akin to war, it's interesting how so many of a previous president's words apply today. FDR was calling the American people to war. Detroit, the car companies and the people in the region alike, must restructure to survive just as we did in World War II. Roosevelt's words inspired a nation to address the task at hand and many of them ring true to Detroiters and those working in the domestic auto industry.

If GWB Used FDR's Speechwriter:

"Let me speak now to the people of Detroit and to the domestic auto industry. We are at a time when the wheels of American industry seem to be grinding to a full stop, when the whole banking system of our country has ceased to function.

Let not defeatists tell us that it is too late to save your industry. It will never be earlier. Tomorrow will be later than today.

This great effort requires great sacrifice.

As the Government is determined to protect jobs, so the Nation has a right to expect that the men and women who build our cars will discharge their full responsibilities to the urgent need to restructure the auto industry and make it profitable.

The Nation expects and insists that management and workers will reconcile their differences and work to make their costs competitive with foreign owned assembly operations.

I appeal to the stockholders and bond holders, to the managers, to the workers, to our own Government employees, to put every ounce of effort into making this plan work and return our automotive industry to profitability.

Detroit can once again be the great arsenal of democracy, leading the economic recovery of our nation. For us this is an emergency as serious as war itself. We must apply ourselves to our task with the same resolution, the same sense of urgency, the same spirit of patriotism and sacrifice, as we would show were we at war.

We have no excuse for defeatism. We have every good reason for hope. The possible consequence of failure of our efforts now are much more to be feared.

We have the people the skill, and above all, the will.

I have the profound conviction that the American automakers are now determined to put forth a mightier effort than they have ever yet made.

As President of the United States I call for that effort. I call upon our people with absolute confidence that our common cause will greatly succeed."

Rick Wagoner doesn't make $15.7 million a year

noreply@blogger.com (Ronnie Schreiber) — Fri, 19 Dec 2008 01:52:00 +0000

Rick Wagoner doesn't make $15.7 million a year. Last year he took home $3.5 million. $1.5 million in salary, another $1.8 million in bonuses and about $200,000 in benefits and taxable perks. The BOD justified/rationalized the bonus based on the $9 billion or so he took out of costs and the successful launches of the CTS and Malibu. That's their rationale, not mine. You can read it in GM's proxy statement in the investor relations section of their web site. It's in their SEC filings. The rest of the 15.7 mil is in stock options and other performance related items that didn't have any value last year and won't have any value in the foreseeable future. Stock options only have value if the market share exceeds the option price.

While reading GM's proxy statement, I came across how much they pay members of the BOD. GM has, I believe, 11 members of the board, all of them outside of the company except for Wagoner, who's Chairman. Board members are paid $200K a year in director fees plus other compensation. In 2007, the board voted itself a 25% pay cut, so salaries for the board were $1.5 million, and with other compensation, GM paid less than $2 million to it's board.

By contrast, Toyota recently announced they they were cutting the bonuses paid to their BOD, which amounted to $11 million in last year. Total compensation to the board in fiscal year '08 was $37 million.

Toyota has 30 members of it's BOD plus 7 auditors. Unlike GM, which has an outside BOD, nearly everyone on Toyota's board works for the company. There are two Toyoda family members on the board (just like at Ford, btw). I don't know if the figure bandied about for "Toyota's top 32 executives" who make less than Mulally or Wagoner or whoever is independent of their compensation as members of the BOD, or is part of that $37 million, but the fact remains that Toyota pays its BOD members and auditors more than 5 times what GM pays its board members.

When board members of Toyota are raking in a million a year, Wagoner's base salary of $1.5 million doesn't look excessive.