Given the interruptions endured by their Japanese arch-rivals, Ford and Chevy  were nearly guaranteed to win the brand volume sweepstakes. But look closer and all is not entirely well at the top of this heap. Ford, the volume leader, grew its overall sales by just 11% last year, in a market that grew 10.3%… in short, Ford didn’t lose any market share, but it didn’t win much either. More troubling for the brand’s long-term prospects, much of that growth came from trucks (up 15.1%), while car volume improved only 3.7%. In short, despite launching a brand-new Focus (which had a disappointing 2011), Ford lost ground in the car game (which grew more slowly than trucks, but nearly matched them for volume). The news was better at GM, where overall sales rose 13.2% on 17.8% car growth and 10.6% truck growth. Still, given the weakness at Honda and Toyota, one would have expected more from a GM that is still rebuilding from its bailout-era downturn.

Toyota and Honda posted similar results, having lost 6.7% and 6.8% volume drops respectively. But Nissan, which recovered far faster from the tsunami and was hit less hard by the Thai flooding, made up for some of their losses, putting a  14.7% volume increase in the Japanese side of the ledger. All three Japanese brands lost volume on their luxury brands, however, bowing before the German onslaught. And though Toyota’s losses were evenly-distributed by vehicle type, both Honda and Nissan relied on truck sales (including non-BOF CUVs) to boost volume. More importantly, the qualitative weaknesses of newly-launched products from Honda and Toyota helped fuel a sense of Japanese downturn that could prove to outlast any impacts of 2011′s natural disasters… but only time will tell.

With Detroit’s offerings enjoying the benefit of comparisons to their ignominious predecessors and new Japanese products enduring the exact opposite, Detroit’s market share growth continues to be mysteriously stalled. Chrysler’s turnaround continues apace, with 26.2% corporate volume growth, but with truck volume dropping in an otherwise strong market for the segment, profits will not grow commensurately. And a 66% increase in car sales growth looks a lot less impressive when you realize that its car sales were a mere 354,359 units… which is fewer than VW/Audi sold in the same period.

So, what happened? Think of the current Republican presidential nomination process as a parallel: Instead of the long-running pitched war between Detroit’s “Big Two” and Japan’s “Big Two”, the market is fragmenting, creating a thick pack of contenders rather than clear winners and losers. Hyundai/Kia enjoyed 26.5% combined growth on record volume. Nissan began to emerge as a rising power after decades of playing catch-up to Honda and Toyota. Volkswagen began its new value-oriented volume blitz, growing VW-branded car volume 29.4%. 44% growth at Jeep propelled Chrysler up and away from unsustainable volumes. Even Mitsu and Volvo posted some of the biggest volume percentage gains, up 41.9% and 24.6% respectively. The days of Toyota-Honda-GM-Ford dominance seem to be coming to an end, forcing brutal battles for every tiny sliver of growth.

Things have not changed dramatically in the truck world over the last year. Though truck volume outstripped car volume by nearly 400k units and though truck sales growth outstripped car sales growth, those gains largely came on the back of non-BOF CUVs. My analysis on the truck front has changed little since I wrote about The Great American Downsizing, and the new CAFE regulations that came out this year show that the days of BOF truck/SUV dependence for any manufacturer are coming to an end. On the car front, the action has been in the compact/midsized arena, the former of which is unsurprisingly exhibiting the wealth of solid options and killer competition that is beginning to define this industry. As 2012 unfolds, I’ll continue to look at the compact segment as a bellwether for the strength of brands. And with new versions of the Camry and Passat out, new Malibu and Fusion models coming, and an Altima replacement likely waiting in the wings, look for the midsized segment to continue to heat up as well. Meanwhile, with the luxury sedan segment essentially treading water, nearly all of the Japanese and American brands will need to dig deep to fend off the German takeover of the market.

The best news coming out of 2011 was that North American-sourced vehicles continued their strong turnaround. Fueled by Japan’s Yen crisis, the weak dollar and overseas natural disasters, insourcing of US sales picked up pace after a decade of precipitous declines. And given the larger trends in the industry, this dynamic should continue as production flees Japan… at least until Chinese imports gain acceptance in the marketplace. Given that this trend is being driven by foreign brand insourcing rather than a resurgence of sales from Detroit, it seems clear that the prospects for US auto industry employment have improved independently of the bailout. Though GM and Chrysler would not have survived this long without government intervention, and though they seem to have stabilized, there’s little to indicate that either GM or Chrysler is en route to juggernaut status in the US market (and GM could well take a PR and sales hit if the government exits its “investment” with a taxpayer loss).

Of course there is much more to analyzing 2011′s sales results than volume alone… from pricing to incentives, from fleet sales to inventory, there are a million qualifiers to the volume numbers that I simply don’t have the data to analyze effectively. Luckily TrueCar, which looks at as much data as anyone, has released a grade sheet for the industry by manufacturer and by brand. And the results there seem to reinforce my perception of 2011: an inevitable loss by the Japanese, and not much momentum gained by Detroit. In short, 2011 appears to have been the year of the insurgent brand (with the notable exception of Subaru, which saw its share peak in 2009-10 and is now falling off), and the opening of a new, more competitive chapter in the US market. This bodes well for consumers, who can anticipate better vehicles over the next product cycle or two, but it also foreshadows another shakeout further down the road. And this time it seems just as likely that Honda or Toyota could find themselves knocked out of the top tier as Ford or GM. In short, there’s never been a more exciting time to be watching the US auto market.

I remember looking at the then brand new Ford Five Hundred and thinking to myself, “This would make one heck of a Volvo.”

Like the Volvos of yore this Ford offered a squarish conservative appearance. A high seating position which Volvo’s ‘safety oriented’ customers would have appreciated. Toss in a cavernous interior that had all the potential for a near-luxury family car, or even a wagon, and this car looked more ‘Volvo’ than ‘Ford’ to me with each passing day.

Something had to be done…

Hmmm… why not subtract ‘twenty’ from the Five Hundred name. Call it a 480, and put in a nice classic Volvo styled fascia on the front end. Throw in an interior inspired by the best of Swedish design and, Voila! Ford would have offered a Volvo that would have hit the square peg of the brand’s main customers… and maybe even a few others who were considering an upscale Camry or a Lexus ES.

Sadly Ford never made a Volvo version of the Five Hundred, or the Flex for that matter. Instead they mis-balanced the diverging priorities of competing simultaneously with BMW (S40′s, C30′s, S60′s) and conservative middle-aged Americans who valued luxury transport over driving dynamics (Xc90, XC60, C70).  The brand became a disaster.

I am starting to see the same ingredients mixed into other brands these days. Take for instance Scion.

Yes this brand will get a nice pop and halo in the form of the upcoming FR-S. Then again, halo sports cars that are shared with other brands tend to be short-lived. Just ask Pontiac and Saturn about the Solstice and the Sky.

So what would be the perfect car to put into Scion’s kinship?

Two years ago I would have strongly argued for making the CT200h a Scion. It didn’t have the luxury trappings of a Lexus. However it offered tons of sporting character and attracted the type of youthful and educated audience that Scion sorely needed at that point.

You know. The type of people that quickly walked away from Scion after they started marketing bloated SUV-like compacts that should have been marketed as… Toyotas… or Volvos. Who knows.

Wait a second. YOU know!

A lot of potentially great cars over the years have been marketed to the wrong brands for the wrong reasons.  So I ask the B&B, “What cars were given the wrong brand, and where should they have gone?”.

Like most marketing classes in modern day MBA-land there are no right answers. Just SWAG’s and opinions. Feel free to demote a Cadillac to a Chevy if you must. So long as you can defend it, let’s hear it.

General Motors announced changes to the Chevrolet Volt’s design after a NHTSA investigation into why a Volt caught fire following crash testing.

The changes will go into effect once production restarts at the Hamtramck, Michigan facility, but customer cars already sold will follow a different protocol.

Starting in February, GM will initiate a “voluntary customer satisfaction program” to make the necessary changes to the Volt. According to GM’s Rob Peterson said that  formal recalsl must be initiated by NHTSA, and their lack of movement prompted GM to enact a voluntary one instead.

The fix involves changes to the Volt’s battery pack housing, as well as a coolant temperature sensor and a special bracket to prevent overfilling. The previous system allowed the battery housing to be punctured, which then resulted in coolant overflowing onto a circuit board causing an electrical short. The short was determined to be the cause of the fire.

All told, this has been a successful holiday season for your humble editor. I have showered myself with gifts, avoided annoying family entanglements, kept my pimp hand weak strong, and made sure there’s a three-hour gap in my Christmas to re-watch Michael Mann’s Heat in its glorious entirety.

And yet… I’m dissatisfied. Perhaps because there are ten simple things the automotive industry and/or its various players could do to make this the best season ever, and as of yet, none of them have been done. So here’s my list, delivered nice and late. Warning: mixture of hatred, sarcasm, and foolish sincerity ahead.

#10: Get the Chinese crap out of iconic American automobiles. There’s no simpler way to say it. Ford, please fit a decent, American-made transmission to all the Mustangs. If you need to, just toss in the GT500 transmission, charge everyone a fair amount for the difference, and rest secure in the knowledge that the right thing has been done. GM, you don’t get a pass on this either. Every Corvette sold in this country should have American-made wheels. It’s that simple. I don’t want to do 195mph on wheels made by suppliers who can just close their doors and reopen the next day under a different name. We won’t even talk about the electronics. Just fix the running parts, okay?

#9: Mercedes-Benz should formally apologize for the W220 and W210. Every customer who purchased a new S-Class or E-Class from those infamously troubled generations should receive a letter in the mail, hand-signed by Dr. Panzer Kampf-Wagen or whoever is running the show nowadays, apologizing for selling them an utter piece of junk. Hundreds of thousands of customers were basically swindled. They thought they were buying a Mercedes-Benz, not a cost-cut half-plastic embarrassment. Make it right. And throw them a little incentive towards the price of a new (and presumably better) Benz, just to make up for the abysmal resale on, say, the 2001 S430.

#8: Kill the Caliber. Okay, I guess that one’s been done.

#7: Buy all the Calibers back. Well, a guy can dream.

#6: Extend the warranty on the Cadillac Northstar. All of them. As dismal as the Mercedes-Benz S430 was, at least the basic mechanical parts were generally sound. Not so the Caddy four-valver. It’s great to drive and the name is also really cool, but they have become infamous for reliability issues. Now would be a good time for GM to show that they are serious about making Cadillac a world-class brand. They could do this by extending the warranty to match that of existing world-class brands like Hyundai, Kia, and Mitsubishi. If you really want to impress people, and if you really want to do something about Cadillac residuals, extend the warranty backwards in time. There’s precedent. Honda did it on the exploding-tranny Acuras. Surely Cadillac can match Acura.

#5: Go ahead and release the real 2012 Honda lineup. Oh, you’ve certainly had your fun with us, you crazy Japan-people, you. We Got Punked! I’m laughing. I really am. So now you can pull the wraps off the Civic, Acura TL/TSX, and CR-Z that you really want people to buy. I can hardly wait. DO EEET NOW. Obviously anybody who accidentally bought the current cars will get to trade, right?

#4: Let’s get Car and Driver and Road & Track off the newsstands. And AutoWeek while you’re at it. Seriously. Those of us who remember these magazines in their prime (not that AutoWeek ever had a prime, but you get the idea) are just depressed by reading them now — and the younger drivers don’t care. Close their doors and give existing subscribers, none of whom paid more than $6.95 a year anyway, their choice of Grassroots Motorsports or Shaved Asians to finish out their terms. Reading these once-great magazines now produces the same uncomfortable feeling I had when I heard that Jaco Pastorius had died in a gutter. Let’s make the dignified choice.

#3: End trim discrimination for manual transmissions. We live in an era where just-in-time manufacturing and supply have revolutionized the way cars are built. There is no reason whatsoever why the Hyundai Elantra Limited can’t be had with a manual transmission. Same goes for any other number of cars on the market. I’m not asking anybody to take the completely wacky step of fitting optional manuals on cars which don’t have them available now. I’m not living in dreamland. I understand that it’s critical for every Nissan Maxima sold to be crippled with that ridiculous Completely Vapid Transmission, and I can see how it’s simply too much hassle to offer a stick-shift in US-market Mercedes-Benz sedans, what with the extra $10 million it would cost to test the powertrain combination. That kind of cash pays for a lot of hidden goodwill programs on the W210 (see #9, above). I’m just saying: if you offer a manual transmission in one trim level, offer it in all of them. TSX Wagon, I’m looking directly at you. It can be special order only. That’s okay. I will wait.

#2: Porsche. Try finding it in your God-damned hearts to engineer, build, and sell a sporting 2+2 made to last a lifetime under a combination of four-season street and casual racetrack usage. Take all the money you waste on lifestyle marketing, accessories catalogs, special promotions, unique tie-ins, PR, free trans-Atlantic business-class flights for sycophants, hybrid drivetrains for five-thousand-pound crapwagons, special advertising sections, long-term loaners, Peter Cheney’s garage door, full-color glossy posters featuring frog-faced, thyroid-deficient trucksedans, whatever special tools are required to make sure the Cayman’s engine pushes less air than the 911′s, and any other unbelievably stupid thing you’re currently doing — and put all of it into creating a decent car. Just do that. Just put aside the thirty years of self-aggrandizing detritus you’ve built up around a once-legendary brand. Just build a car that will run 200,000 miles with careful maintenance the way (some of) the air-cooled cars did. I want to buy a Porsche. But I’m not a big enough fool to give you $85,000 for something that will have major, unresolved defects and a 35% residual five years after I take delivery.

#1: I’d like my colleagues to look in the mirror. If you’re writing in this business, today would be a good day to take stock of who you are, what you’re written, and the things for which you personally stand. Today would be a good day to remember that, although your super-best-friends in the PR business may pay for your daily driver, send your family on vacations, and pick up the tab for your drinks, your genuine and true responsibility is to the people who read your articles. My son is two and a half years old. The day will come when I am dead and he will only have what I’ve written to guide him as to who I was. He will see that I was flawed, intemperate, promiscuous, and occasionally naive to a fault — but he will also see that I believed in my readers and was passionate about creating content in which they could believe. Will your son be able to say the same? Or will he say, “My father (or mother) was a pawn of people who bought and sold him for the price of a monthly car payment”? Here’s a litmus test. If you had more interactions with PR people, fleet managers, and industry buddies than you did with your own readers last month, you’re part of the problem. Fix your wagon.

What are the chances I will get any of these gifts? Let’s be honest. It’s between slim and none. I have received one thing for which I am grateful, however: all of you at TTAC. Time and time again you have demonstrated that, collectively, you are the greatest group of partners any writer in the automotive world could wish to have. Merry Christmas to me, indeed.

Brethren, we are once again gathered together to mourn the passing of another automobile company. Saab was of that rare breed of car that always had a band of devoted, aye, fanatical followers. In her prime, Saab could not fail to ignite the after-burners of anyone with a predilection to genuine character, speed, innovation, intelligence, and even sexy good looks (at times). Not bad for a company that never once designed a clean-sheet new engine and borrowed more platforms than Heidi Klum. But when you’re small and from Sweden, resourcefulness is essential: Saab finagled an existence in this brutal industry far longer than might have been expected.  But now she joins an august group of other fallen automotive heroes in Valhalla: Borgward, Panhard, Tatra, Kaiser, Glas, TVR, Jowett, etc…better that then whoring herself to another rich benefactor. But Saab’s story is worth retelling.

Forget the “Born From Jets” tag line; it was propellers anyway. And in actuality, Saab was born out of necessity, as so much else at the end of the war. We built the factory, now what do we do? Do what everyone else was doing: build a car. And how? Easier said than done. Contrary to endless attempts to prove otherwise, there’s hardly anything in common between the two. So where to start?

How about with this? Saab wouldn’t be the only ones looking to DKW for inspiration. And what a brilliant car DKW’s F9 prototype was, especially in 1939. A highly aerodynamic body and a two stroke engine driving the front wheels. The car of the postwar future. What’s not to like?

Initially, the sixteen Saab aviation engineers (of which only two had a driver’s license) assigned to the task  came up with something a bit more radical and avaition-like, as in all the openings in the car being stressed members, like airplane hatches. Not practical. So they scoured junkyards, and bought some new cars, including a DKW. The more functional end result, the 92001, or Ursaab, certainly pays homage to the F9 as well as their relentless pursuit of an even lower coefficient of drag.

The prototype was powered by an actual DKW engine and transmission, a two-stroke twin producing 18 hp. With an (ac)claimed Cd of 0.30, the 92001 undoubtedly made the most of that modest power. Or at least looked like it. And rarely has an automobile company (save VW) had a more iconic birth-mobile.

And like the VW, it was hardly original. But what car is? Originality is largely overvalued anyway. As with any birth, what counts is  the harmonious convergence of genes. And although the Ursaab was more fetus than progeny, it embodied the qualities that would hence define (real) Saabs: feminine, creative, intelligent, feline, eccentric, distinctive, progressive.

No wonder Saabs came to be embraced by those attracted to its inherent qualities, to the extent of being stereotyped as a college professor’s car. As limited as any such generalization ever is, that expression did mean something more once than today. Or did it? Is the Prius a college professor’s car?

Maybe it’s easier to define Saab’s intrinsic personality by contrasting it to that other Swedish car company, Volvo. The two are almost perfect complements. Volvo dates back to 1927, and its cars have traditionally been, well, traditional. Firmly embraced by the more conservative set, there is a saying that captures its place in the Swedish mindset perfectly: Volvo, villa, vovve (Volvo, house, dog). No wonder Volvo came to be famous for their wagons, like the legendary Duett.

Volvo’s all-new car for the post war era, the PV444, may have adopted a bit of hump-backed aero-pretense, but it was fundamentally a brick compared to the Saab. And built like one too: tough, masculine, conventional in configuration and execution.  A solid and reliable burgher.

Of course, it was a bit different in the States, where Volvo was one of dozens of import brands, and also came to be associated with college professors as well as engineers and parents with kids in Waldorf schools. But that’s all relative; and even in the US, Saabs were always one or two steps to the quirky side of Volvo. And which company is still around, even if owned by the Chinese?

After a few years of refinement and the deft hand of the gifted industrial designer Sixten Sason, the Saab 92 entered production in 1949. The DKW engine gave way to Saab’s own interpretation of it: 746 cc, 25 hp, thermo-syphon cooling, and a three-speed transmission with column shift.  Top speed: 64 mph (105 kmh). Time to get there: indeterminate.

The nattering two-stroke spewed a plume of blue smoke on acceleration, and blubbered on over-run. A bit ironic then, that the stinky,smoky Saabs were so favored by the progressive set. But the idea of two stroke was enthralling to certain minds. Only seven moving engine parts! Just the thing to brag about over chianti while listening to a jazz combo. Smugness is born from (ram)jets: No moving parts at all!

But two-strokes are very receptive to tuning. By 1952, a Saab 92 (now with 35 hp) brought home the first of many victories at Monte Carlo, copping the Coupe des Dames there, with Greta Molander at the wheel. A delicate foreshadowing of greater things to come.

The skirts were really lifted for the Sonett I, Saabs first tentative foray into genuine sports cars. Developed in a barn by a few enthusiasts, the Sonett had a 57.5 hp version of Saab’s new three-cylinder two-stroke. Weighing some 1300 lbs, this was a brisk little barchetta good for 100 mph, nothing to sneeze at in 1955. Racing would have been its purpose in life, had the rules not suddenly changed. Although only a handful were built, it was not forgotten. How could it be?

The Saab was thoroughly re-engineered for 1955, now called 93. The new three-cylinder yielded 33 hp, still feeding through a three-speed, with over-run. The first Saab to be exported, it arrived in the US just as the great fifties import boom was really getting under way. Yes, these are what I used to see as a kid blowing smoke around the University of Iowa campus, confirming their stereotype.

And one of the kids in my grade school class rode in one of these. His Mom was at least as good looking as this one. Although the Type 95 had a perfectly functional rear-facing third seat despite its compact dimensions, I preferred to sit in the second seat, directly behind her. The back of her neck smelled much better than the exhaust sucked in from the open rear window.

The definitive first-generation Saab was the 96, built for some twenty years, until 1980. A more in-depth write-up can be found here, but  let’s just say Saab was doing a VW during all those years, with the biggest change coming in 1967, when impending emission regs killed the two-stroke once and for all. Ironic too, that an American-designed engine would be the only thing to fit under the hood in front of the axle line.

The little 60 degree V4 was originally intended for Ford’s VW fighter in the late fifties, the aborted Cardinal. The car and engine were shipped off to Cologne, Germany, where the V4 and its six cylinder offshoot powered millions of Euro-Fords, before finding its way back home into millions of Explorers and such. And of course Saab 96s, where it was embraced with welcome engine mounts. A number of other engines had been tried, but the Ford was right-sized and right-priced. Just not right-sounding, as it’s nigh-near impossible to make a V4 sound like its not missing a cylinder or two. But for the 96, it just was just another continuation of its eccentricities: from engine blubbering to engine stuttering.

Saab carved out an impressive corner in the world of racing by sticking mostly to rallying, if not all four wheels. The high-performance GT 850 Monte Carlo two-stroke, and the later V4s racked up repeat wins at Monte Carlo and elsewhere, especially in the hands of the legendary Erik Carlsson.

The Sonett re-emerged in 1966, this time as a coupe and production-ready, with the US as the prime intended market. Making room for the V4 only challenged its intrinsically compromised lines further. It was one of the most eccentric sports cars ever, at least from a mass-producer of automobiles. There were plenty of British limited-production plastic-bodied weirdos then, but who ever actually saw a Fairthorpe or Berkeley Sport? Sonetts, yes. Better to be inside it than the other way around.

The attempt to smooth out its bulbous nose on the Sonett III was somewhat successful. But with arrivals like the cheaper and infinitely more powerful and handsome Datsun 240Z, the Sonett’s few buyers were serious Saabistas, especially since it had all of 65 hp. A Karman Ghia without the Italian styling. But this was no damensportwagen; it was a gnarly little troll, and its buyers were certainly not needing for public expressions of their virility.

By the mid sixties, Saab was now twenty years old, and ready to make its mark in the automotive world. It was an ambitious act, and the most defining one. As well as the last truly all-new all-Saab. The 99 arrived in 1967, ready to take up battle with the likes of the small BMW, Alfa Romeo Giulia, and of course Volvo’s also-new 140 Series.

Despite reflecting a more rectilinear world-view of the times, the 99 still cut through the air with a very respectable Cd of 0.37. It was roomy, handled well, had fine brakes, was comfortable, offered excellent traction, and was powered by…well, nobody’s perfect (except BMW, of course).

The engineering firm Ricardo had assisted Saab in developing its own four stroke engine, but it was going to be too expensive to finalize and put into production. So Ricardo put Saab in touch with another client, Triumph, that was just about to put its own new SOHC “Slant Four” engine in production. Saab once again did the (seemingly) expedient thing, and had engines shipped from England. It won’t come as a surprise to hear that this didn’t work out so well. By 1972, Saab started building its own improved version of the engine, now known as the B engine.

As is fairly obvious, Saab 99 and 900 engines were mounted “backwards”, with the output and clutch at the front, then feeding power to the transaxle mounted underneath the engine, although with its own oil supply. Mustn’t be too conventional.

In 1974, Saab added a sloping rear hatchback to both its two and four door 99s, creating the combi coupé, or Wagon Back, in Americanese. This became a defining aspect to most Saabs hence, or it least it seems that way. And it was remarkably roomy back there, thanks to the low floor height. It was the closest Saab got to building an actual wagon in a long time. Meanwhile,Volvo was churning out wagons by the boatload.

During the seventies, when American cars lost their mojo, Saab’s was very well intact, and growing. The 99 started out reasonably powered by European standards of the time, but that was just a starting point. Increases in displacement, fuel injection, and the sporty EMS model countered the trend convincingly. But the real kicker was the 99 Turbo, which blew a fresh and stiff new breeze upon the automotive landscape. And made indelible impressions on those who ever got behind its wheel.

At a time when Detroit V8s were making as little as 110 hp, the two-liter turbo four packed all of 145 hp. Sounds ridiculous now, but in 1978, it was a revelation. Especially compared to the BMW 320i, which had all of 105 hp. It’s all relative, and the Saab Turbo helped spark the whole turbo revolution. Soon Dodge Caravans would be proudly sporting turbo badges. The Saab 99 Turbo was a prophet of the eighties, as malaise gave way to yuppiedom.

The short-nosed Turbo 99 had a brief life, and is hard to find in the wild anymore. Replaced in 1979 by the 900 series, which featured a longer sloping hood to help meet US front impact standards. The (original) 900 probably defines the “Classic” Saab better than any other. Certainly more so than the Vectra-based neo-900.

Convertibles, and higher performance models, along with an ever-greater refinement in technology, 16 valve heads, electronic engine controls, and minor body tweaks kept the 900 going all the way to 1993. A remarkable 25 year run for the definitive Saab.

Well before the 900′s protracted demise, Saab knew it had to be replaced. But the complexities and costs of developing a brand new car was too much, so Saab joined hands with Fiat on the Type Four platform, that would constitute the Saab 9000 of 1984, as well as the very similar Fiat Croma, Lancia Thema, and the better disguised Alfa 164. A competent and roomy car, it was a bit more challenged in taking on the deeply entrenched and successful mid-sized premium cars like the Mercedes E-Series and BMW 5-Series. Buyers in this class were not so readily moved by the inherent advantages of fwd and a hatchback. A sedan version soon followed, but obviously the fwd was here to stay.

The usual progression of styling tweaks and performance updates tried to keep the 9000 relevant and attractive. The reality was that the 9000 was not a hit, and Saab was in a pickle. The 900 was aging quickly, and the 9000 was not producing the profits necessary to even contemplate successor cars for either of them. Saab’s ambitious push into the premium sector was stalled, and the nose was pointing earthward, precariously so. Time to bail out, or be bailed out. Where are the parachutes?

That GM would be the one to buy Saab was not a good omen. It was obviously a case of Jaguar envy, after Ford snapped up that equally desperate automaker. Undoubtedly, GM would have preferred BMW, but it kept saying nein danke! Everyone was getting into the Euro premium car game, and never being one to be left out, GM bit where it could. Who would have thought?

Thinking didn’t appear to be the primary factor; more like fear of getting left behind. That’s one of the most powerful decision drivers ever, usually for the worse. And how exactly was GM going to successfully manage another weak brand? At the end of the worst decade of its existence, when its own market share was imploding? In the usual way, by platform sharing.

Ok, but execution is the key, and Saab’s (unfortunately named) neo 900, riding on an Opel Vectra platform, was quickly seen for what it was: the future of Saab, for better and for worse. Saab now had access to capital, technology, and GM’s euro-V6 engine, but quality and genuine Saab-ness were sorely missing.

After five years of GM’s involvement and sanitizing, Saab finally showed an operating profit for 1995. It was not to be a regularly recurring feature. Not that it kept GM from buying the rest of the company in 2000; they were too committed by then not to. Welcome to the growing GM orphanage!

GM’s versatile 2900 platform was duly enlarged a bit to accommodate the long-overdue 9000 replacement, the awkwardly named 9-5. Like the 900, soon to be called 9-3, these cars had their virtues and vices, lovers and haters. You can duke that out yourselves, but what can’t be argued is that they failed to save the brand, in more ways than one. GM had the answer to that problem too: brand extension, the formula that also worked so well at Saturn.

Have we almost forgotten (or repressed) the Saaburu? Graft a Saab nose on the Subaru WRX, and it’s…just about the best Saab made in ages! Here was the true successor to the spirit of the real old Saab. Too bad Subaru had co-opted that decades earlier. Subaru probably mopped up more ex-Saab and Volvo drivers than any other brand.

And as appealing as the 9-2x might have been with GM’s crazy discount prices at the time, the ruse was seen for what it was: another pathetic joke in GM badge-engineering’s comedy club. Also known as the Improv.

That was just the warm-up act. The headliner was the 9-7. An Saab born from truck frames and V8s. Probably the best SUV of its kind GM ever built; what more can be said? Poor Saab, now a sex change operation in its old age. What next?

Nothing. Our Eulogy ends here, because if the true Saab was still alive to some extent then, the 9-7 was the final straw. Everything that happened since are the twitches and jerks of a zombie. And we’ve been well inundated with the antics surrounding it.

Many may well have enjoyed a genuinely positive experience with their 9-5s and 9-3s and such, but the level of Saab fanaticism in these recent months is remarkable. It seems to be a reflection of the times: I’m entitled to have Saab, because I’ve pinned my self-identification to it. I’m owed Saab.

I’d have been much happier to see Saab go to its inevitable grave twenty years ago, without the GM years and recent histrionics. Death is never a pretty thing, car companies included. We might have spent the past twenty years arm-chairing endless “what -ifs” and “could-have” scenarios. But its hard to imagine anyone coming up with a more bizarre outcome.

So will we spend the next twenty years debating alternative outcomes? Not me. Saab was an iffy proposition from the get-go, and there’s really no room left in the market for what Saab once embodied. Others have long plucked its remaining useful attributes and made them their own.

If there really was to be a true Saab born from airplanes today, it might look something more like this. And we all know how that turned out. Everything has a season, and Saab’s is well over.

 Thanks to Ingvar Hallstrom for the insights

 Paul Niedermeyer is the Editor of Curbside Classic, where every car has a story

The rise of the internet has had myriad effects on everyday life, not the least of which has been its profound impact on consumer behavior. With ever more data being made available online, and with the rise of independent alternative media outlets like TTAC, car buyers in particular are fundamentally changing their relationship to the car buying process. Dealers have been noting for some time that the internet has created better-informed buyers who, armed with more information, are demanding the car they want at the best possible price, wreaking havoc on traditional car dealer tactics like upselling and opaque pricing policies.

But as the eternal dance between supply and demand shifts in favor of consumers, some dealers and OEMs are having a tough time adjusting to the new reality. At the same time, the need to make money off of online consumer education has created some tension for the new breed of consumer-oriented websites. This conflict has now broken out into the open, as the auto transaction data firm TrueCar has found itself locked in a battle with American Honda over the downward pricing pressure created by more widely accessible transaction data. And the outcome of this conflict could have profound impacts on the ever-changing face of the new car market.

Early last week, TrueCar CEO Scott Painter took to the TrueCar blog with an “Open Letter To The Automotive Industry,” in which he argued

Our world is changing. Unprecedented access to information and a massive shift in consumer behavior has resulted in a challenging new automotive retail landscape. It has also enabled a consumer appetite for data transparency. To hide from evolving consumer behavior is to deny change. At TrueCar, we embrace this opportunity. We also believe that transparency is the centerpiece of trusting relationships. Some in the industry disagree.

And indeed, from personal experience I feel comfortable saying that TrueCar does provide consumers with some highly valuable information by tracking vehicle transactions from several data sources and publishing the range of transaction prices on a local level. This clearly helps consumers navigate the often opaque and confusing world of dealer-level pricing, and facilitates a more efficient interaction between supply and demand. And if that’s all TrueCar did, it would be impossible to argue with the valuable service it provides.

But in order to fund its business model, TrueCar cannot simply give away data and hope everything pans out for the best. In order to generate profits, TrueCar works with “dealer partners,” allowing them to present a lower “haggle-free” price for the model being researched at no upfront cost. If the consumer buys that car, TrueCar gets a $299 commission from the dealer; if not, the dealer pays nothing. Dealers can tailor these “guaranteed lowest prices” based on TrueCar’s data, and they seem to generally beat non-”guaranteed” prices in the TrueCar “price curve” display by only a few hundred dollars. But by offering this service to its dealer partners, TrueCar has opened itself to conflict with OEMs, as this fiscally-necessary service muddies TrueCar’s role as a pure consumer service. Which is where the conflict with Honda comes in.

In his “Open Letter,” Painter mentions no OEM by name, and TrueCar’s EVP for Dealer Development Stewart Easterby tells TTAC

 We’re not trying to pick a fight… we very much value Honda/Acura. We have strong OEM relationships through our recent acquisition of Automotive Lease Guide, and we have lots of people on staff who have work for OEMs, so we generally have strong relationships with the industry.

But in an Automotive News [sub] piece published on the same day as Painter’s “Open Letter,” the TrueCar CEO claimed that American Honda was warning dealers away from advertising below-invoice “guaranteed lowest” prices. After talking to American Honda, AN updated its piece, noting that it had

incorrectly reported that Honda singled out TrueCar.com when the automaker warned dealers that they would put their local marketing payments from Honda at risk if they offered prices below invoice on Internet shopping sites

In fact, what had happened was that American Honda had simply warned its dealers that any advertisement of below-invoice prices could jeopardize the marketing assistance money Honda sends dealerships. American Honda’s Chris Martin clarified the automaker’s position in an emailed statement to TTAC, noting

Dealers who wish to receive marketing funds are expected to adhere to certain guidelines that govern dealer participation in its Honda Dealer Marketing Allowance (DMA) Program and its Acura Carline Marketing Allowance (CMA) Program.  Among the many advertising guidelines to which dealers must adhere to in order to receive DMA/CMA Funds, Honda dealers are restricted from advertising new Honda vehicles at a price below dealer invoice plus destination and handling charges and Acura dealers are restricted from advertising new Acura vehicles at a price below MSRP plus destination and handling charges.  Such guidelines do not limit a dealer’s discretion to advertise a new vehicle at any price if the dealer is not seeking DMA/CMA Funds.  Furthermore, the dealer is free to charge customers any price it chooses, in its absolute discretion, for a vehicle.

Martin goes on to identify the central bone of contention:

The development of third party websites used for advertising is not any different than advertising pricing in a traditional newspaper or on TV.

And here, American Honda has something of a point. Whereas TrueCar’s price curve is a pure reporting tool, simply reflecting otherwise available data, it’s not entirely unfair for Honda to characterize TrueCar’s service to dealer partners as an advertising service. In practice, the only real difference between this service and any other form of advertising is that TrueCar only gets paid if a car gets sold at the “guaranteed lowest” price offered by one of its dealer partners. If you accept that reality, Honda has some very valid reasons for threatening to withhold dealer marketing assistance, as Martin’s statement explains

The function of these [DMA] guidelines is three-fold. First, it encourages dealers to use the advertising money provided by American Honda for interbrand advertising.  That is, rather than providing funds to dealers so that they can engage in discount advertising against other Honda and Acura dealers (which does American Honda and consumers no good), American Honda wants dealers to use the funds to promote the advantages of Honda and Acura vehicles when compared with competing brands. Second, discount advertising is detrimental to the Honda and Acura brand images.  American Honda has no wish to pay for ads that portray its products as “cheap” or “low-end” vehicles.  This may be appropriate for other manufacturers; it is not appropriate for the Honda and Acura brands.

So far, so reasonable. TrueCar’s service may be more palatable than the local, low-rent “Check Out Our CRAAAAZY Prices!” ads you see on TV, but in practice there’s little meaningful difference. Besides, the choice belongs to dealers: either accept Honda’s money with the inevitable strings attached, or throw in your lot with the new lower-price, but potentially higher-volume TrueCar (or CRAAAAZY Prices!) strategies. But with its third rationale for its policies, Honda strays from this reasonable territory, and betrays a distinct bias against TrueCar, arguing

Third, American Honda believes that much discount advertising is bait-and-switch advertising, which is not beneficial to the consumer and reflects badly on the manufacturer that condones it.  Dealers that advertise vehicles for extremely low prices (as some do on the TrueCar site) may engage in either direct bait-and-switch tactics or using the automobile’s brand name to sell expensive accessories, service contracts and the like.

Memo to Honda: these practices are as old as the auto industry itself. Suggesting that these tactics will never be used at dealers who toe Honda’s DMA line is just as disingenuous as the implication that TrueCar’s dealer partners are more likely to use them. If anything, TrueCar’s major sin is that it makes below-invoice advertising easier for the OEM to monitor and therefore squelch than in the pre-internet days, when consistently maintaining these DMA standards would have required a survey of every local publication and TV/radio broadcaster (not to mention direct-mail marketing), a task that no automaker was or is equipped to do.

But Honda’s apparent antipathy towards TrueCar is just the tip of a growing resentment towards the site. In a speech cited in the AN piece published last Monday, AutoNation CEO Mike Jackson expressed the angst that appears to be spreading across the auto retailing industry, especially in light of its recent deal with Yahoo [sub].

The good deal that they’re pitching to the consumer is lower than average. So to the extent that everyone goes with the TrueCar price, it moves the average down. It’s a death spiral, and the question is whether they are powerful enough to unleash that dynamic in the U.S. marketplace.

But Jackson’s implication, that TrueCar can essentially manipulate the market in favor of consumers, simply doesn’t hold up to scrutiny. On an abstract level, you can’t repeal the law the law of supply and demand. As Painter puts it

They’re trying to say Hondas are worth more than invoice, but if everybody’s paying less than invoice, that’s not true

More practically, however, TrueCar’s own data seems to refute the industry’s fears. Specifically, Easterby tells TTAC

TrueCar represents two to three percent of new car sales… we’re flattered that people think we’re influencing the market, but at that share, we clearly aren’t. The 21st C consumer demands transparency in all products and services, that’s what the web has done. TrueCar reflects the market, just as Zillow reflects the market for real estate, rather than determines it.

Even more importantly, Painter insists

Our goal at TrueCar is to foster healthier relationships between manufacturers, dealers and consumers through data transparency. To deliver on this promise, we require a high standard from our 5,800 dealer partners – an upfront competitive price and a commitment to a great customer experience. A discoverable upfront price is the cost of getting noticed. Contrary to popular concerns this does not create a “race to the bottom.” The lowest price only secures the sale 19.2% of the time within the TrueCar network. The sale is still won by location, selection and good old-fashioned customer service. [Emphasis added]

So where does this all leave us? Clearly Honda has the right to withhold DMA money from dealers violating its reasonable conditions on that money. By the same token, dealers have the choice of pursuing higher volumes with less traditional advertising by choosing the TrueCar strategy, or continuing to follow the time-honored tradition of collaborating with the manufacturer. And here, TrueCar’s price curve, which it says is not populated by dealer partner data but from independent, anonymized sources, becomes the killer app: it’s so good (reflecting a claimed 90% of all new car transactions), it can’t help but draw ever more buyers, who will then be exposed to its dealer partner “advertisements.”

Ultimately, it’s difficult not to conclude that TrueCar (and sites like it) won’t continue to draw ever more dealers away from the old DMA agreements, especially as online research becomes more important to the car-buying process and as traditional advertising dollars flow from TV, radio and print towards the internet. And if dealers and brands are sufficiently hurt by downward pressure on pricing, the alternative is always there. This is how competition works, and because TrueCar has more fundamentally aligned itself with consumers and the power of the market, it’s tough seeing them not coming out ahead in this struggle. And if they do, car buying could be changed forever. Again.

Click here to view the embedded video.

This is one of my favorite music knock offs, the Hindi version of Europe’s “The Final Countdown”. My point? If the folks at Mahindra Planet are right, it’s only a matter of time before the Bollywood Music types rip off Skynyrd’s classic, “Sweet Home Alabama.” Which will be pretty awesome, I assure you!

The big box of a building in Muscle Shoals is rumored to be the future home of the Mahindra TR20 and TR40 compact pickups. The truck gurus at Navistar supposedly signed a 10 year lease on the facility this October: could the company that fought Ford tooth and nail take Ford’s compact truck market share once the Ranger officially dies next week?

But let’s not get too excited about our prospects for a pure compact pickup, a stickshift, gutsy Miata with a bed if you will. Nothing’s ever perfect.

If the EPA figures are right, the TR40 is a bit of a buffet slurping Yankee. Considering the price volatility of diesel and the fuel economy of gas trucks, that’s a big problem. And who knows if these rigs have enough engineering prowess to overcome the road/dirt driving dynamics of a Tacoma. It’s same (potential) Achilles’s heel that put the Model T out of production and Chevrolet on the map.  Then again, this interior shot suggests the TR isn’t a bad place to do business.

Rear HVAC vents?  Not too shabby! Who knows what the future will provide?

Off to you, Best and Brightest.

With NHTSA opening a formal defect investigation into the Chevy Volt, GM is moving to defend its rolling lightning rod (no pun intended) and allay consumer fears about its safety. Yesterday I briefly appeared on Fox Business’s Your World With Neil Cavuto show to talk about what the intro to my segment referred to as “the hybrid from hell” and the “killer in your garage.” I tried to explain that the danger to consumers was basically nil, and that the real concern is for rescue, towing and salvage workers. And I would have explained why NHTSA’s tests still leave some serious questions open, but my “fair and balanced” approach meant that my segment ended up being extremely short. So let’s take the opportunity now to look past the hysteria and pinpoint the real issues with NHTSA’s investigation into the Volt.

A recent GM press release on the issue was accompanied by a conference call to reporters [transcript in .doc format here], in which GM’s top product executives, North American President Mark Reuss and Product Development Boss Mary Barra, gave GM’s perspective on the flap. But in a key passage, Barra confirmed that the most reasonable criticism of GM is essentially legitimate, as she confirmed that GM had not fully developed post-crash safety procedures before putting the Volt on the market.

Three weeks after the [initial NHTSA side-pole] test, the Volt caught fire.  This vehicle crash test was conducted before GM had finalized its battery depowering procedure.  We have learned that significant electrical charge, or energy, was left in the battery after the test.  When electrical energy is left in a battery after a severe crash it can be similar to leaving gasoline in a leaking fuel tank after severe damage.  It’s important to drain the energy from the battery after a crash that compromises the battery’s integrity – or you risk potential fire.

That’s why we have developed a process to depower the Volt’s battery after a severe crash.  We have been using the protocol since July of this year and we have now shared this process with the NHTSA and are working to extend this process and the needed equipment to those who handle or store vehicles after a severe crash.

Unable to deny that it should have had post-crash protocols in place before launching its first lithium-ion battery-powered car, GM seems to be trying to broaden the issue to extend beyond the Volt. Said Barra

But I also have to put this into the proper perspective:  Battery safety isn’t just a Volt issue. This is an issue we’re already working within the industry.  In fact, we are currently leading a joint electric vehicle activity with the Society of Automotive Engineers and other automotive companies to address new issues such as a process and protocol for depowering batteries.

The problem is, this does appear to be a Volt issue. Between the Nissan Leafs already on the road and the Prius Plugins that Toyota has been testing for years now, there are no documented thermal events that I’m aware of. Furthermore, the loss of battery integrity that the Volt experiences in side impacts seems to be caused by the lack of a steel battery case, which Nissan fits to its Leafs. Though it’s not clear what post-crash procedures Nissan has proliferated, it seems that its decision to protect its batteries with steel casings maintains battery integrity in government crash testing, eliminating the risks seen in the Volt.

Meanwhile, there is one question that nags at me. In the wake of the June fire at a NHTSA facility, GM shared its post-crash safety protocols. But the latest Volt fire, which happened a week after NHTSA, DOE, DOD and GM engineers test-ruptured a Volt battery, ”sparked a fire of a wooden structure” at the DOD’s Hampton Roads facility. Here’s what’s not clear: whether that battery pack was subjected to GM’s post-crash protocols. If it was, this fire proves that GM doesn’t have a handle on this problem, and that its safety procedures are insufficient. If the post-crash protocols were not followed, NHTSA, DOE and DOD were incredibly stupid to store a battery pack they knew might catch fire in a wooden building. Furthermore, GM’s communications team has yet to clarify whether this latest fire was caused because safety procedures were not followed intentionally. One way or another, this needs to be clarified, even if it makes the government testers look foolish.

Based on GM’s reaction, deploying top executives, offering loaner cars, and vigorously defending the Volt in the press, it’s clear that The General takes this situation incredibly seriously… which is why I’m a little shocked that it hasn’t cleared up the circumstances of the most recent fire. After all, the Volt is easily the most controversial car in America, and based on my experience on Cavuto yesterday, it’s clear that many hope to use this investigation as the final nail in its coffin. But there is still much we don’t know about these thermal events, and what we do know indicates that they are not an immediate danger to owners and drivers.

So where is the danger? Clearly to the afore-mentioned rescue, salvage and towing workers… but also to the Volt’s sales. The Volt already has marketing challenges based on its price and association with the bailout. Even the hint of a fire risk is going to add the Volt’s sales headwind, making it even tougher to meet its goal of selling 45,000 units in the US next year. Meanwhile, the White House’s goal of putting 120k Volts on the road next year is pushed even further out of reach.

In short, this does not appear to be the death blow that Volt-bashers were hoping for, and GM appears to be handling the situation as well as can be expected. But this incident does highlight the downsides to pioneering new technologies, and shows how just one overlooked detail can create huge PR issues.

No one cares, at least not among the automotive press, as to what happens at the  (Phoenix) “Arizona International Auto Show” held every year over Thanksgiving weekend. There are no world or US product launches, no concept cars on display, and only a few attractive booth babes. Just a bunch of production (or almost ready to launch) vehicles for the masses to touch, feel and some even to drive (on the road) or experience (like Jeeps on an indoor obstacle course) sprinkled with a few exotics (roped off of course) to ogle over.

But TTAC cares. Why? Because the world of automotive retailing depends on the masses to buy cars, lots of them. The folks who go to smaller market car shows don’t go to see the whimsical fancies of vehicle designers (cause there aren’t any), they go to check out real cars that they might buy. Watching and listening to these attendees can tell those of us that care where the winds of favor will blow. What’s hot and what’s not.

Here’s my take. Toyota and Honda are mostly last decade’s news. The public blew past their booths, barely giving the new Camry a glance, and ignoring the already disparaged Civic. The Prius V – meh – just a larger Prius. And Scion’s new IQ? There’s no chance of this vehicle gaining sales traction except in dense urban environments where parking is a premium or for ZipCar users. It’s just too small, not “cute” enough for high school cheerleaders, and not macho enough for…meat eaters. Both of these Japanese brands have resorted to dumbing down their product so far that they’ve become messes of mediocrity. Functional perhaps but competitors are passing them by…and so are shoppers.

Nissan is a bit more interesting than its two Japanese rivals, but that’s not saying much. At least there were some folks looking at the Murano Cabriolet, admiring its soft palette color clearly reaching for the heart strings of the ladies. But it’s expensive, lacks any utility whatsoever, and seems almost as a desperate attempt to revive sales of its base platform. The other mainstream cars – Versa, Sentra, and the aging Altima – had few showgoers touching or feeling them. Maybe the public is getting bored with Japanese cars? I am.

On the domestic front, things look better but the skies are still cloudy. Jeep brought their indoor adventure ride to prove the ruggedness of the Grand Cherokee and the Wrangler. It’s impressive to watch these machines, loaded with attendees, tackle obstacles that would destroy ordinary sedans. The public loves it and Jeep, Marchionne’s savior brand for Chrysler Group LLC, is bringing home the bacon. How much can the Wrangler really cost to build? And the development costs of the GC got wiped out in the bankruptcy. On the other hand, the Fiat 500 is now definitely considered as a “chick” car thanks to J Lo’s advertising. It might be cute but didn’t seem to be generating the buzz it needs among the crowd.

GM’s main sales driver is Chevrolet. People still get excited about the Corvette, the Camaro found a nerve with the politically incorrect, and its trucks pay for all of it. But the new Sonic – believe it or not – is truly competitive as a B-segment offering. It’s fairly substantial feeling – the doors close with a solid thunk, the interior is one of the best in the segment, and when the turbo 1.4l becomes available, it will become a darling of the community college crowd. Buick on the other hand is nice but….soft. The new Verano will be a sales flop. A tarted up Cruze that’s too small for most old folks…oh wait, that’s not Buick’s target market any more. How could I forget that the Regal is going after Acura buyers now…really? Was Acura even at the show?? Did anyone notice?

Ford. Someone needs to tell Ford to stop messing around with the consumer electronics interface and get back to some basics. I drove the Fusion Hybrid and it’s lacking (more on this later). I know a new Fusion is due next year and it can’t come too soon. The switchgear in this car is awful – plastic parts from years gone by. The driveline made funny noises – a couple weird clunks here and there and engine noise penetrated the cabin. I hated it. I then switched out and drove an Ecoboost 2.0L Edge. Surprisingly, it seemed to be adequately powered for a blown four, quiet on the inside, and fairly plush although the MyFordTouch is completely baffling. But then I saw something astounding. The driver’s door edge trim (where the door skin overlaps the door frame) was poorly finished. Creases were obvious and there was some pocketing that had started to rust – on a brand new car! I checked the other doors – same thing. And opening and closing the doors – light and tinny. The door handle mechanisms felt like they would break off in my hand. Alan – if you’re listening – you’ve got some work to do on the basics.

The star of the show – wait – it’s Kia. Yes, Kia. In particular, the new Optima. Get inside one. Check out the interior, the switchgear, the roominess, and finally the price tag. Amazing. And that’s not the only car in the lineup that’s impressive – the public flocked to the display checking out the merchandise. I can see why. I experienced the Optima Hybrid at the test drive center before entering the show. I was a back seat passenger – but couldn’t tell it was a hybrid. Smooth and quiet unlike the Ford Fusion Hybrid I drove later that day. I also drove a loaded Optima Turbo. Heated and cooled seats in a $31,000 ride! The car was powerful, smooth, and better than any Japanese car now offered in this segment. No wonder Kia can’t make them fast enough.

So there it is…the future is being led by the Koreans. The domestics are in second. And the Japanese are trailing by a mile. The world is changing fast. Who would have guessed?

As Bertel pointed out earlier today, peak oil is here: the graph above is not from some fly-by-night EV firm, but Toyota, an auto industry giant. What years of environmental and security arguments failed to communicate, economics is now explaining with little difficulty. Namely, that demand for oil is growing faster than supply, forcing developed economies to look beyond oil for future growth. And, as you might expect from a conservative player in a conservative industry, Toyota argues that the solution to this growing disconnect is a portfolio of drivetrain technologies. But what if, instead of trying to adapt an existing business model to the new oil reality, you built a new business model from the ground up? That’s exactly what Project Better Place is trying to do, and the contrast between its approach and that of Toyota is fascinating to anyone interested in the future of the automobile.

Toyota’s approach to a world of constrained oil supply in the incremental manner that one would expect from a giant company selling millions of cars each year. In the words of Satoshi Ogiso

To control this gap, we must go multi track. We must improve gasoline and diesel engines. We must increase the number of hybrid models. We must produce the plug-in hybrid. We must develop city commuter electric vehicles. We already started small production of fuel cell vehicles.  We must do all these improvements at the same time.

That approach seeks to serve the entire global marketplace for cars, and places a huge demand on R&D efforts, requiring a company of Toyota’s size to execute the strategy. Better Place’s approach on the other hand couldn’t be more different. Rather than taking a multi-technology approach, BP is focused on one technology: EVs. And rather than building cars itself, BP is focused on providing the services, infrastructure and grid management tools to make EVs viable for more than “city commuter vehicles.” In short, whereas Toyota seeks to evolve, BP is attempting to create the circumstances under which EVs are the natural choice of technology for all automakers.

These vastly different approaches to the same problem have, at their cores, a conflict over philosophy. Toyota, along with the rest of the car industry, is trying to maintain the market for cars as best it can, while slowly introducing new technologies at higher prices which will then trickle down throughout the lineup. As conditions evolve, the market will demand different technologies from Toyota’s toolbox in different amounts. On the other hand, markets are notoriously bad at foreseeing and managing energy price spikes, as witnessed by the crazy segment fluctuations during and after the Summer of 2008. In contrast, rather than promising a steady evolution towards oil independence, BP offers the opportunity for a quantum leap. Its basic mechanism is the government, rather than markets, which can better prepare a nation for the future rather than relying on often-painful,inefficient market mechanisms. And with demand unlikely to drop below supply any time soon, Better Place is the only option for governments with enough political consensus to preemptively force themselves through petroleum-based transport withdrawals.

But just because Better Place is more fundamentally dependent on government assistance than its alternatives in the auto business does not mean it’s another Solyndra. In fact, Better Place has raised some $750m in equity financing, including a $200m round that was announced at the end of last week. Its backers now include, HSBC, Vantage Point, Lazard, Morgan Stanley, UBS, GE, and Israel Corp… none of which are blue-eyed dreamers. And their fiduciary reasons for backing BP appear to be well-grounded: although the company is “pre-revenue,” its valuation (post money valuation on a fully diluted basis) is now $2.25b. That’s an 8x increase for the first round of investors, who would have been hard-pressed to find a stronger return over the 2007-2011 period. So, where does all this value come from if there are no revenues yet? According to the firm’s communications director, Joe Paluska points to

the uniqueness of our model (i.e., investor confidence that we can unlock a hyper growth category for affordable electric cars) and the major trend lines of oil forecast to go up and battery prices continuing to decline with the delta being our operating margin.

Better Place also has another secret weapon that’s sure to attract investors: its CEO, Shai Agassi. The former software maven who created Better Place after being passed over for CEO of SAP, Agassi is one of those rare people who can communicate an idea as complex as Better Place’s network of battery swap stations, its decoupling of the EV and its battery, its under-covered grid management capabilities, and the macroeconomic backdrop that he insists will make it all work. Having met a number of brilliant and intimidating luminaries of the auto industry, it’s safe to say that none of them made quite the impact on me that Agassi did when I met with him earlier this fall. Between the sheer scope of his ideas, and his flinty, intellectual-street-fighter demeanor, it’s safe to say that Agassi is the closest to a truly historical figure that I’ve met in my years covering the auto business. And with the auto industry stuck in the model of slow technological evolution exemplified by Toyota, Agassi embraces the revolutionary approach that a clean break from the past is not only possible, but necessary.

When I ask Agassi if he wanted to “destroy the auto industry,” a charge often leveled against him by industry executives, he smiles and answers with another question:

Did Jeff Bezos want to destroy the publishing industry? Because that’s what he did. But he did it because he saw the potential for an entirely new business model with the Kindle. In effect, the world’s biggest bookseller killed off its existing business, selling paper books, in order to create an entirely new business in digital media.

No wonder then, that Better Place faces such resistance from the established forces in the auto industry, despite the market’s clear optimism for his approach. Thus far, only Renault has signed on to partner with BP; elsewhere, Agassi says the industry is deeply resistant to the idea that infrastructure can make electric cars viable for the majority of the auto market. He sketches a quick graph showing total cost of ownership over 300,000 miles: the cost of a car, gas and maintenance on one side, and the cost of a car, several batteries and electricity on the other. With battery prices near $500/kWh and headed downwards while gas heads upwards, he points to the difference and says

I don’t want to destroy the car industry, I want to destroy the oil industry. I want to share this money with the car companies. When was the last time they got a check from the oil companies?

It’s a question that’s as provocative as Better Place’s business plan, and the fact that it doesn’t convince the automakers shows how deeply conservative the industry is. But then, why get in bed with a plan that aims to kill off your entire gas-powered business when Better Place can’t even prove that there’s a market for their model?

That’s the challenge Better Place faces right now. Its first networks, in Israel and Denmark, are being built up as we speak, ahead of a slow rollout next year of the Project’s services and vehicles. And says Agassi, the first year will be slow and there will be problems. Like what kind of problems? Agassi smirks slightly and says

We’re going to find out. Imagine the first guys to install gas stations… you think they didn’t run into a few unexpected problems?

But it seems that Better Place’s problems thus far have little to do with implementation and everything to do with the fact that big ideas are scary and draw knee-jerk reactions. For example, take a recent Wall Street Journal [sub] piece which cites the concerns of one Moni Bar, chief executive of Budget Rental Cars Israel-Domicar Ltd. For example:

Mr. Bar said that he fears vehicles with switchable batteries might lose as much as 70% of their original value in four years

An interesting complaint, but one one that seems borne of paranoia rather than reality. After all, one of Better Place’s key advantages is that you don’t buy an EV battery, but just the car. The battery is owned by BP, which you then buy a mileage plan from, allowing you to swap batteries at will and insulate yourself  from the 70%-range depreciation that will afflict EVs where you do have to buy the battery. Though BP does not have a buy-back scheme to maintain resale values, it insists that the 70% depreciation number is way off. And with its new Fluence EVs selling for less than the Mazda3 (Israel’s most popular car) and offering a 20% improvement in Total Cost of Ownership (including gas and maintenance), it’s not too surprising that 400 of Israel’s largest corporate fleet owners have signed up to switch their fleets over to Better Place (the majority of new car sales in Israel are made through fleets). As Agassi puts it

We don’t have a demand issue, we have a rollout issue. The first year we are going to take care to have a carefully controlled rollout.

Getting that rollout right is the major challenge for better place, a it is not evolving an existing product to changing times, but is rather attempting to change entire parts of the world all at once. Today it’s Israel and Denmark, next it will be Australia (which Agassi describes as “two and a half Israels, linked by a freeway). Perhaps someday it will be the San Francisco Bay Area, a market Agassi also compares to Israel. Like everyone else, Better Place needs to build scale in order to bring prices down to the point where unlimited-range, limited-depreciation EVs can compete on pure economics; unlike everyone else, BP can be patient while it rolls out its first networks. After all, it doesn’t need to spend huge amounts researching multiple solutions… it just needs for gas prices to march ever upward and battery prices to keep dropping. And when the next big gas price spike arrives, you can bet that a number of governments with overnight mandates to solve, not “work towards solving” oil dependence, will be calling up Agassi. After all, if you want to “shoot the moon” in the race free private mobility from oil dependence, Better Place seems to be the only option out there.

What gets left out in the hue and cry is that Tesla and Fisker between them represent “only” about a billion dollars worth of DOE loans in a program that was supposed to be able to loan out $25b (the final tally could be closer to $18b). Dwarfing the half-billion-each investments in Fisker, Tesla, and Solyndra are projects that seem a lot less risky in contrast to the startups. Here, in Smyrna, TN, I got to see one of them being built.

This plant, which was still very much under construction when we visited two weeks ago, will be able to build 200,000 battery packs per year when it reaches full capacity. That will make it one of the largest battery manufacturing plant in the US, and will add 1,300 workers to Smyrna’s already Nissan-swollen economy. Perhaps most astonishing in the age of the global supply chain, it will be a remarkably integrated production center: batteries built from raw lithium will be assembled and mounted in Nissan Leafs built at the main manufacturing facility next door, using electric motors built down the road in Decherd, TN. It’s as close to Henry Ford’s ideal of the materials-in, product-out “complete factory” as you’re likely to find in the auto industry, let alone the green-car startups.

And though the Smyrna EV manufacturing capability may be a throwback to the days of vertical integration, the battery assembly plant itself couldn’t be more different than anything ever seen in the auto industry. We weren’t allowed to bring cameras into the plant, but it would have been difficult to photograph anyway. Instead of a huge, open space full of robots and stamping presses, this plant is a huge open space full of gigantic clean rooms. Materials move in one end of its U-shaped assembly flow, where they are assembled into cells. The completed cells are tested at the back in what looks like giant racks of servers, and then they move down the other arm of the U, where they are assembled into packs. But none of this is obvious from any point inside the main structure, as the huge clean rooms where assembly work is done obstruct any view of the complete process.

For now there’s not much to see at the Smyrna battery plant. Equipment is only just being installed amid the ongoing construction, and because the manufacture of cells is so unlike traditional automaking processes, it’s difficult to picture what these rooms-inside-of-rooms will look like when production gets rolling. Only the giant HVAC ducts which keep the clean rooms relentlessly ventilated speak to the kind of white-glove environment that will eventually take root in this plant. Some b-roll footage from the Leaf’s pilot plant in Oppama fills in a few blanks.

It doesn’t take a good imagination to understand what the Department of Energy invested in at Smyrna. Though EVs are, in the sweep of the industry, a relatively risky segment, Nissan already has a plant pumping out Leafs in Japan, and the resources to manage a ramp-up in volume. When Smyrna joins a Sunderland (UK) plant in production, Nissan could muster a quarter-million electric cars each year… and likely has left room to grow. There’s no awkward transitions in the business plan from high-price, low volume to low price, high volume, no question of the company’s manufacturing ability. The car was developed in-house, by a company that is backing it at a scale aimed at crushing the start-ups. If the US government wants to lay the foundations for an EV manufacturing base in the US, it’s hard to imagine a better project to stimulate.

Whether the government should be involved in developing any specific kind of economy is, as always, a matter for philosophical debate. Practically speaking, however, neither the Solyndra scandal nor the possible future collapses of Tesla and Fisker will have much bearing on real the value of the DOE’s ATVM program. Especially if political patronage did indeed play a role in Fisker, Tesla and Solyndra’s funding, they will simply prove that government programs are vulnerable to waste and corruption. No surprise there, nor any problems unique to the “green economy.”

If, on the other hand, events in a certain turbulent region of the world (combined with demand pressure from China and India) send gas prices soaring again, Smyrna could end up justifying the entire loan program.If the market turns to EVs in an energy crisis scenario, the Leaf will be the only EV with the combination of (relatively) low price, adequate performance and most importantly production scale to meet a spike in demand. In a scenario in which EVs are suddenly in high demand, what good are Tesla and Fisker with their expensive low-volume luxury cars?

Like any other investment or gamble, you always have to balance risk and reward. Not only does Nissan’s project offer the least risk, as it has the resources to absorb losses, but it also offers the most clear reward of any other EV bet. Certainly the government should have stayed away from Tesla and Fisker, but it’s difficult to say that we won’t one day be glad to be hosting the epicenter of EV manufacturing for the leading pioneer in EV manufacturing.

Disclosure: Nissan bought myself, Bertel and Steve Lang lunch at a “Meat and Three” on the day we visited the Smyrna facility. Don’t know what a “Meat and Three” is? I didn’t either…

I remember the look on my father’s face when I explained to him that I would be selling cars. It was the look any of someone who has just heard the details of a grisly murder; a bit of curiosity, quickly overtaken by disdain. He sank into his chair. “It’s a job,” he grunted, and I realized that was as strong an endorsement for my new job as I was going to get. Truth be told, I felt about the same.

It’s no surprise that the car salesman has been painted as a snake-oil pusher; a charlatan peddling his wares to people in an unethical manner. Like all stereotypes it’s a vast overgeneralization, but I had the same perceptions of car salesmen as anyone going into my first day at work. I wondered: how accurate were the portrayals in popular culture? Would I have to get white shoes and slick back my hair? Would I have to wear a pinky ring?!

My fears were assuaged as I was let in on the trade secrets. Here’s the dirty, sordid summation of car salesmanship: guide, but don’t push. That’s it in a nutshell. Sure, we accentuate the positive attributes of a car and explain why the car fits the needs you, the buyer, have laid out for us, but it does neither you nor us any service to try and push you into a car you don’t want.

The nature of the business is a strange one; both sides, neither friends nor foes, feigning small-talk while each wanting to retain money that is up for grabs. As my contempt for my new profession faded and I discovered that a few bad apples had soiled the reputation of all car salesmen, I began to observe the odd interactions between buyers and salesmen. Certain unexpected truths quickly revealed themselves.

Truth #1: Everybody Wants to Buy, but Nobody Wants to be Sold

On my second day at the job, a veteran salesman summed up every buyer: everybody wants to buy, but nobody wants to be sold. He was right.

Instead of pushing anything, I began to familiarize myself with cars and whenever I talked to an “up” (an on-the-lot customer), I started by asking buyers what were “musts” and what were “preferences”. The process started with them narrowing in on what they envisioned for their ride. If people envision driving down the freeway in a luxury SUV, no matter what kind of sedan you show them, they will feel conned if you push them towards a sedan. Then, you will have lost their trust and most likely, their business. So, we always take the buyer’s lead. “You want a ½ ton Chevy with an extended cab? Great, we have several of them. You mentioned you would like it black. If the price was right, would you consider a different color?” Every preference has its price.

Despite the shady reputation, car salesmen really do listen and care what car you want. The problem is that most buyers aren’t sure of what they want themselves. We have to guide you to the sale, but make sure it’s your idea. Honestly, it’s exhausting. Our persuasive skills mainly come into play in the negotiation process. So, before you step on the lot, write out your “musts” and be prepared to articulate them to your salesman and you’ll make it easier to find that for which you are looking.

Truth #2: Buyers are (Most Likely) Not Professional Negotiators

As we walk amongst the rows of cars, buyers are wary of salesmen. They’re fearful we will pull some voodoo magic mixed with a Jedi mind-trick and force them into buying a car against their will. Once they’re in the office, a façade of skepticism and unearned bravado washes over them and anxiety dissipates like a Xanax in full effect. Husbands will swagger as if to say, “I’ve got this. I know how to haggle.” It’s an odd phenomenon because this is where buyers should feel the least confident.

We know the buyer likes the car. The average person goes through the car buying process a handful of times in their lives. Yet, while the salesman deals in car sales frequently, the buyer often puts forth a confident front. It’s reminiscent of the stereotypical tourist who saddles up to the blackjack table in Vegas insisting that he has a “system” after having read a book about gambling on the plane. Remember: they didn’t build Caesar’s palace by losing to tourists, and we don’t sustain a living by being bested by buyers. Does it happen? Sure, but not often.

It’s weird to witness; the theatrics people pull to show they won’t be pushed around. They will stomp out in a huff and hope we chase after them. They will low-ball us and claim that they saw the exact same car down the road for that price. If they had, they would be down there buying it.

The best way to get a killer deal is to approach the negotiation from a prepared standpoint. Do your research! Know, realistically, how much the car is worth (not according to Kelley Blue Book, but local market value), and understand that the dealership needs to make a profit, too. If they offer you a ludicrous deal, showing them that you know your stuff goes a long way to getting them to knock off the high-balling. If you come prepared with a reasonable offer, based on facts and not wishful thinking, things will go a lot smoother for everybody and you won’t appear foolish. While bravado is often a sign of unsure footing, preparedness illustrates to us someone who is not easy fooled and will often yield a better deal.

Truth #3: The Real Savings are in the Trade-in Allowance, not the Price

People do whatever they can to not pay sticker price. Paying full sticker can feel like a moral defeat. However, where salesmen often have the most wiggle room is in the trade-in allowance.

We get a commission based on the profit the dealership made. We also give you the littlest amount for your trade-in so that when we sell it, we make the most money. Furthermore, we need to allow as much room as possible in case your trade-in (that you swore “runs like a top”), needs costly repairs.

When you come into our office and demand we lower the asking price, we are hesitant to do so because it eats away at the profit margin as well as our commission. A better tactic is to ask for a better price on your trade.

This is tricky. Don’t be defensive. Everybody is defensive when that jewel of a car is appraised for two-thirds its actual value. Instead, insist that the sticker price is a bit high, but that you are more concerned with the trade-in allowance. Getting a thousand dollars more for your trade-in is the same as getting a thousand dollars off the selling price. But it can be easier to get the trade-in number to budge.

Of course, every dealership is different and may have different policies as to how they figure commission. So it won’t necessarily work at every dealership. But if raising the trade-in allowance doesn’t affect the salesman’s commission, then you will likely get less resistance from him.

It’s a strange business, alright. However, people need cars and as my dad said: it’s a job.

On the way to TTAC’s Southern Tour, I filled some of the gaps in my automotive history by reading Car Wars by Robert Sobel. Written in the same year that Nissan opened its first US plant, a sprawling complex in Smyrna, Car Wars documents the early years of the Detroit-Import wars, starting with the Beetle and ending with the rise of the transplant factories. The book is full of lessons, but its most rattling reminders was that Nissan was the major Japanese automaker during the early days of the Japanese industry. Nearly thirty years after Car Wars was written, Nissan often gets lost in Honda and Toyota’s shadow when it comes to perceptions of the Japanese OEMs. And lately Nissan has fallen off more than a few radar screens for the simple fact that its key products are aging: Sentra, Maxima and Altima were introduced for the 2007 model-year, while Rogue is just a year younger. Together these four models account for over half of Nissan’s monthly volume… and yet despite this aged core lineup, Nissan’s sales (as a brand) are up over 17 percent year-to-date, maintaining the brand’s consistent growth.

And, after touring the Smyrna facility last week, Nissan’s VP for Communications David Reuter told us that this fact was what made him so optimistic about Nissan’s future. If sales are doing this well with product this old, he wondered aloud, what might happen if.. say, models representing 75% of Nissan’s sales volume were replaced in a two-year span? He admitted that one of the brand’s biggest issues was breaking through the Honda-Toyota monopoly on media perceptions of Japanese automakers, and he suggested that a new product blitz was the only way to really accomplish that. I was reminded of the current darling of the mass-market brands, Hyundai, which grew sales steadily with aging and stolid but value-laden products, before replacing its entire lineup with eye-catching new models. Could a fresh batch of new designs do the same for Nissan?

Of course, a lot of that depends on product execution. Hyundai would not have garnered the attention it has if it had replaced its entire lineup with new but dowdy or uninspired models. And on that front the picture is still mixed: critics have been cruel to Nissan’s newest car, the Versa, but consumers have been snapping them up in the first two months of sales. Meanwhile, the brand’s recent niche products (Juke, Murano CC) have received mixed and polarized responses. And Nissan’s got a raft of new technology to play with for its new cars, including a next-gen CVT and its first-ever in-house front-drive hybrid system (look for Bertel to bring you more on that from Japan shortly). And though the brand likely won’t be jumping on the turbocharging bandwagon wholesale, it seems likely that our prayers have been answered and that the Juke’s delightful 1.6 turbo engine will make its way into an SE-R-type vehicle to celebrate the revamped lineup. This couldn’t hurt Nissan’s flagging reputation for sporting mass-market vehicles.

One thing is certain: Nissan may not get a lot of press these days, but the brand has been thriving given where it is in its key product cycles. If the new high-volume models (which Reuter says we’ll learn more about at the Detroit Auto Show) bring some pizzaz back to the brand, it could well be poised to exploit Honda’s recent product weaknesses and Toyota’s battered image. With the right execution, we could find ourselves returning to a time when Toyota and Nissan are once again the Japanese standard-bearers. On the other hand, Detroit isn’t sleeping on the competition the way it once was. And Hyundai will certainly have a few things to say about any company looking to steal its momentum.

So while we wait to learn more about Nissan’s upcoming product blitz, we’re curious to hear your take on the brand’s fortunes. What explains Nissan’s resilience in the face of old product? Do you expect the new products to vault the brand into the “hot” category, or do the downsides of recent products like Versa and Murano CC leave you a bit suspicious? Will Nissan surpass Honda as a leading Japanese brand, or is the Honda-Toyota duopoly cemented in the minds of consumers? What do you hope to see from the next-generation of Nissans? So many questions…

[Disclosure: Nissan bought me lunch when I toured their facilities in Smyrna and Franklin, and I am about to be bought dinner by the company in Seattle, where I will be hearing more about this subject from Director of Product Planning Mark Perry. If you have any questions for Mark, you have a few hours to post them in the comments below]

You know, it’s getting goddamned hard for a chap to enjoy a decent corporate-sponsored nosebag from time to time what with the ever-imminent prospect of Jack “Banquo” Baruth popping out from behind a silver soup tureen and shouting “J’accuse!” like some sort of admonitory, jort-clad Visigoth. At least, such I was thinking to myself as I lined the walls of my pericardium with the rich yellow fat best produced by overly-sauced food and moderately crappy wines.

This was in the latter stages of a lunch – sorry - launch I was attending in, admittedly, a very unprofessional capacity. I’m still not entirely sure how I ended up here, but I’m one of those people who can’t say no when offered work; here though there would be no byline, and theoretically therefore, no conflict of interest.

Still, I was keeping one eye open, metaphorically-speaking, for our own favourite Sword of Damocles, as – pardon me good sir, but I believe your trotter is in my trough!

Lifer Automotive Journalist the Size of a Small Moon: “Oh, do beg pardon. Snarfle-snarfle-glub.”

Think nothing of it. Now where was I? Ah yes, the dining room. There I was, surrounded by the ambiance of several tonnes of avoirdupois on the hoof rapidly consuming their considerable body weights in alcohol, rich meats and cream-based sauces. The sound was akin to that of creating a vast clone army of Cookie Monsters and then turning them loose to attack the Nestle Toll House central warehouses. Om, as they say, Nom.

As I sat, replete and idly wondering how much leftover ribeye I could secret away in my pockets for homeward economy-flight consumption before I became drunk enough to lose basic motor skills, a voice hissed at me.

“Psssst!” came the hoarse whisper, “Lime-Green Audi S5!”

Thus it was that I received the secret verbal handshake that identifies those of us for whom the gravy train remains a bemusing through-the-looking-glass experience, best described by TTAC contributor Derek Kreindler as a luxury vacation with people you hate. Not that I object to the free bacon of course.

Fast-forward a bit and here I am again at yet another free-for-all, sipping a Stone IPA I didn’t pay for, noshing on some quote-unquote “vintage”  ribeye – hipsterism for carnivores? – with port-wine reduction. As our gracious host rises to his feet to thank the assembled journalists for coming, thus reminding us all about how important we really are, I’m thinking about Jeff Glucker.

A better writer than I has already covered this topic, but moving forward, the immediate fallout of Gluckergate has been the usual 10-10-80 polarization of those who read, follow and comment on the various automotive blogs and websites that are part of Interwebs 2-point-whatever-we’re-at-now. 10% of people were outraged at Mr. Glucker’s ethical mis-step, and applaud Jalopnik’s no-holds-barred outing. 10% of people (including yours truly) were outraged at Jalopnik’s mean-spirited sensationalization of Mr. Glucker’s misstep, their gleeful attempt to score points off a rival blog, and the offensive odour of holier-than-thou adopted by a site that used to be a cool place to get COTD.

For 80% of folks however, it seems to have been no big deal, business as usual, a Pontiac Tempest in a GM-stamped Teapot that showed up in a giftbag in the free hotel room you were flown to on business class. By the way, these are only approximations – I don’t know how accurate my Scion calculator is.

The consensus seems to be, and I apologize in advance as I’m about to start slopping around the whitewash of generalization here, that automotive “journalism” should forever be aware of the invisible quotes surrounding the latter half of its appellation. At the end of the day, to seize hold of one of the most hackneyed phrases available, the public sees us as little different from those who review TV shows or toasters.

For me, it’s even more simple: there but for the grace of God, go I. Like Jeff Glucker, I am no Baruth or Farago when it comes to “tirelessly savaging his enemies”. Quite frankly, the thought of even mildly inconveniencing an enemy makes me yearn for a nice, long, mid-afternoon nap. No, I’ll have to be content with merely savaging the English language.

And really, fat jokes aside, who am I to begin to cast the stones of ethics at my colleagues when I myself am working towards the same equipment list as the current Nissan Altima: full-size spare tire as standard. If there’s a sin too often revisited at the TTAC offices, it’s that of patting ourselves too hard on the back for being independent, and incorruptible, and outside the mainstream.

But when our own Edward N. half-despairingly asks the question, “where is the pride?” I bristle. It’s right goddam here.

No, not necessarily only in the articles and reviews before you now, but in the company I am privileged to keep. It’s in the excellent weirdness found at Glucker’s own Hooniverse website. It’s in the riotous anarchy of the 24 hours of LeMons. It’s in the sensible debate of a Best and Brightest comments section and the in-sensible arguing on the facebook page of a certain be-flipflopped TTAC alum.

Surely, the face of automotive journalism has changed as the face of traditional media has changed; not always for the better, but with a new host of writers and thinkers, and most importantly, with a new kind of audience. Not only that, but also the shoulders of the giants we stand upon are not always as sloping as we New Breed hacks would have you believe: there are many print journalists to whom I humbly doff my cap.

The cogs of the PR machine grind grimly on, just as they always have done, with free lunches and free cars, jewel-like launch settings for economy-grade rides and endless giveaways. But the cogs have chipped a tooth: in internet forum discussions, in the musings of those automotive writers I’m honoured to call colleague and in, quite frankly, a higher calibre of PR folks who actually care about the companies and products they represent, there is pride to be found.

Most of all, dear reader, there is you, the TTAC audience; the some of the people you can’t fool any of the time. It is my humble privilege to lay before you such scribblings as I do and have your own finely-tuned bullshit-o-meters waver the needle if you detect the influence of a comped bar-bill.

In the meantime, I happily wade though rivers of bearnaise to bring you The Truth, ever mindful of my responsibilities to the pull-no-punches ideals set out by our founder, and carried on by the writing and editing staff of TTAC.

Obsequious Waiter: Would Sir laike an aftair-dinnair meent?

No, sod off. I’m absolutely stuffed.

Obsequious Waiter: Oh, but Sir, it’s only wafair-theen.

Oh all right, just the one then.

Kaboom!

The Detroit News reports that the White House has ordered a review of the Department of Energy’s various loan programs in the wake of the Solyndra scandal, noting

White House Chief of Staff William Daley ordered an independent analysis on the state of the Department of Energy’s loan portfolio — including loans to solar, nuclear and auto companies.

“The president is committed to investing in clean energy because he understands that the jobs developing and manufacturing these technologies will either be created here or in other countries,” Daley said.

One of those programs is the so-called “Advanced Technology Vehicle Manufacturing” loan program, which was nearly used to fund the Detroit bailout and has since come under fire from various quarters. Twice already the Government Accountability Office has questioned the ATVM loan program for its lax oversight, weak goals, lack of technical support, inconsistency in awarding loans and the undetermined impact of funded vehicles. And those internal issues could help explain why the Center For Public Integrity has accused the ATVM program of operating a patronage scheme, alleging that major Obama donor and Tesla board member Steve Westly personally benefitted from loans made to the company. And on the Fisker side of things, backer John Doerr of the VC firm KleinerPerkins is another major Obama donor, suggesting a pattern of politically-motivated loan awards to well-connected EV firms that carry high risks. With government intervention in the auto industry still a hot-button issue in the wake of the bailout, this scandal has huge implications for the legitimacy of America’s emerging “industrial policy.”

Meanwhile the real victim here could be Chrysler, which desperately needs to develop vehicles with higher fuel efficiency and yet has not received any loans that it applied for in the pre-bailout period. Not only could this put Chrysler’s finances under pressure, but it also shows a distinct lack of focus or strategy in the White House’s industrial policy. The bailout era was rife with justifications of the rescue of GM and Chrysler on the basis that the firms would build a new generation of green vehicles. And yet GM has withdrawn from the loan program, and Chrysler is being strung along… while both (but Chrysler in particular) struggle to bring up their average fuel economy which are two of the lowest in the industry. Having rescued these two firms, why would the government choose to send available loans to firms like Tesla and Fisker, which are aiming for the luxury segments and thus have less chance of creating significant impacts on both jobs and the US’s status as a green economy leader? The answer may prove to be found in the relationships between Fisker and Tesla’s well-connected backers.

The fact that Fisker is building its first car in Finland has dominated the political outrage over the ATVM loan program, but the real issue is the opportunity cost. If there is proof that Fisker and Tesla received loans because of political donations made by their backers, it will have diverted money from more effective opportunities, proving that government intervention in the economy is fundamentally fraught with inefficiency. Though Republicans and others have purely political motivations for trying to give the Obama Administration grief ahead of an election, there is a real principle at stake here. If the government is going to play a role in guiding industry towards more sustainable strategies, it needs to take the utmost care to optimize that aid in terms of both market and jobs impacts. The nature of the auto industry is such that start-ups face incredible challenges, and as luxury manufacturers, Tesla and Fisker will neither sell many cars nor employ many Americans. The resources, experience and infrastructure already in place at major manufacturers make them the logical place to invest “green” loans… especially because the bailout did not, in fact, prepare them especially well to compete in the green car space.

Ultimately, governments need to face a fundamental choice:  either allow the market to drive innovation at the risk of losing jobs to other countries, or intervene with programs like this one on a purely utilitarian basis. There is some evidence that government incentives for future technology development can help lumbering auto firms prepare for unexpected energy shocks in ways that the market might not always be able to do, with its relatively short-term incentives. But if there’s not a utilitarian strategy underpinning these government interventions, the effort will inevitably fall victim to political patronage, and all of the inefficiency (not to mention blowback against all forms of government intervention in the economy) that comes with it. By giving hefty loans to two unproven but well-connected startups, the Obama Administration has run the risk of fostering a backlash against all forms of green  incentives… and the result could be merciless market pressure on lagging firms like Chrysler should another oil price spike come. In that scenario, Chrysler could find itself in serious trouble again, and be forced back to Washington for its third bailout… further driving the inefficiencies of the apparently politically-motivated loans to Fisker and Tesla.

The idea that environmentalists in this country are waging a “War On Cars” has gained some currency within the right wing in recent years, fueled by the Obama Administration’s increased emphasis on public transportation and cycling. Of course, statistically speaking, the car is proving more than capable of defending itself, as sales and ownership levels remain improbably robust (in per-capita and per-GDP terms) despite the recent “Carmageddon.” But GM waded into the fray anyway, running the anti-cycling ad seen above in several campus publications (via bikeportland.org), likely in hopes of fighting against the kuruma banare phenomenon that began with Japanese youth abandoning cars and has progressed to a full-blown national love affair with bicycles. But cyclists are a passionate bunch, and GM’s ill-advised ad prompted a torrent of Twitter protests (see for yourself), eventually causing the automaker to apologize and pull the ad.

GM’s Tom Henderson tells the LA Times

The content of the ad was developed with college students and was meant to be a bit cheeky and humorous and not meant to offend anybody. We have gotten feedback and we are listening and there are changes underway.  They will be taking the bicycle ad out of the rotation…. We respect bikers and many of us here are cyclists.

In other words, this is the ultimate proof that outsourcing ideas to consumers is lazy and ineffective. A good marketer would have instantly seen the problem with this entire ad concept and tossed it (and the Deans Lister who came up with it) as soon as he saw it. There are basically two reasons to bicycle: because you have to or because you want to. Those who have to bicycle can’t afford new cars, while those who want to cycle are going to be alienated by any slight to their passion… especially from a company like GM. In other words, an ad like this is not only ineffective, it exacerbates the nascent antipathy to automobiles among young people.

And make no mistake: automotive ambivalence among young people is growing. As someone who lives in America’s cycling and hipster capital, I can confirm that carlessness is cool… and cycling as a lifestyle choice is even cooler. As I wrote two years ago

Historically, America’s youth have flocked to Automobiles as a tool of personal freedom, an escape pod from the world of adult responsibilities and a way to connect with other young people. Today, these crucial marketing values have been stood on their heads.

If a young person does buy a car, it’s almost always because they need it for their job. Though debt, insurance, maintenance and speeding tickets are the real-life downsides of auto ownership, the crucial issue in the uncooling of cars is the image of car ownership as a a complex of obligations all of which add up to less freedom. The automobile has become a tool for connecting people to their responsibilities, a symbol of debt and talisman of that youth anti-icon, the beaten-down, middle-aged commuter. And what’s less cool than that?

This perception has only increased in recent years, fueled by a cultural “perfect storm” of generational changes. Indeed, today I’m even less optimistic about the car’s cultural relevance than I was when I concluded

America will not stop being the giant, spread-out country in which cars are the major mode of transportation. But the fact that there are nearly as many cars as people in this great land means that the auto industry is ultimately a victim of its own success. Still, if the industry is able to connect with the values that are leading young people away from automobiles, there’s a chance to check this trend.

But it won’t be easy, because young peoples’ expectations of automobiles are actually rising. If automakers are able to offer vehicles which can embody fun, freedom, practicality, efficiency and timeless design, there’s a chance to refocus the youth market’s desire onto automobiles… Recapturing the cool is a major task for the automotive industry, and fighting this perfect storm of cultural changes won’t be easy. This is a marketing, development, design, and technology challenge that makes getting consumers to consider GM look like, well, child’s play.

And yet, ironically, here is GM flaunting its complete ignorance of this crucial cultural dynamic with a single ad. And not for the first time. A 2005 ad that ran in the Vancouver area displayed the same out-of-touch insecurity, bashing public transportation and offering a Chevrolet Cavalier as its alternative.

Despite GM’s recent breathless enthusiasm for marketing to the under-30 “Millenial” set,  these two ads prove that the company’s ability to understand and market to young, car-ambivalent people hasn’t improved in the last six years. If anything, bashing bikes is worse than bashing public transportation because of the immense enthusiasm for cycling and its health and environmental benefits. The fact that a significant number of cyclists choose the two-wheeled lifestyle for political reasons make even a relatively minor slight from a multinational automaker all the more tone-deaf. Rather than mocking cyclists, automakers should be appropriating the bicycle’s cultural appeal with ads showing cars and bicycles coexisting in a youthful lifestyle.

With Millenials on the verge of becoming the majority of the car market, GM needs a massive gut-check if it hopes to have a chance of understanding and addressing the “uncooling” of cars. A potent symbol of the social and economic reality of being a young person today, bicycles are fundamental to that understanding. In fact, I’d argue that bike rank second only to handheld devices as a symbol of youth culture. Cars, meanwhile are dropping off the list, not because of an environmentalist agenda or hostile White House but because of the changing conditions facing young people today. Until the car industry wakes up to that reality, blunders like this one are inevitable, further driving the wedge between the industry and the young people it’s desperate to reach.

Last fall, the first tests of the new Chevy Caprice PPV, Dodge Charger Pursuit and Ford Taurus Interceptor generated quite a bit of interest here at TTAC and beyond, as three all-new contestants battled to replace the outgoing Crown Victoria as America’s cop car. At the time, the Caprice seemed like the clear performance favorite, but as Sajeev Mehta has pointed out, there’s more to the cop-car equation than pure speed. Although good luck trying to tell the Detroit Three that, as all three are cherry-picking performance stats in the wake of the latest round of Michigan State Police testing.

• Chrysler arguably has the biggest performance win to brag about, noting that the “fastest-ever lap time at Grattan Raceway [1:33.70] highlights Dodge Charger Pursuit V-8 as the police sedan with the best combination of acceleration, braking, handling and dynamics.” The V8 Dodge also recorded the fastest 0-60 and 0-100 times of the trio, thanks to an optional acceleration-biased 3.06 rear axle ratio and a revised engine management system that allows top speeds of up to 151 MPH (all new for 2012, along with upgraded brakes). For the record, that 1:33:70 time is exactly three seconds faster than the Charger’s best lap time last year.
• After “creaming” the competition last fall, it seems GM was caught a bit flat-footed by Mopars upgrades, and its press release makes no mention of its lap time (its best lap time last year was a 1:35:80). Instead The General brags about the Caprice’s leading top speed (154 MPH) and 60-0 braking (125.8 ft). And despite last year’s “LS-X FTW” talk, the Caprice V6 turns out to be the most impressive model, beating both the Charger V6 and the Taurus non-Turbo V6 in 60-0 mph braking, top speed and acceleration.
• As predicted last year by Sajeev, Ford’s Taurus appears to be something of a performance back-marker. Ford’s presser doesn’t mention a single performance statistic, instead seeming to coast on the Panther-Interceptor’s coattails with bullet points like “Now police departments and other law enforcement agencies can get an all-new, American-made vehicle with the expected durability and price of the popular Crown Victoria.” Ford’s only performance argument is that the Taurus Ecoboost outperforms the Crown Vic… a stunningly low bar to set (even the Impala 3.6 hits a higher top speed than the EcoBoost Interceptor).

But, as we’ve pointed out, efficiency and reliability are for more important for police fleet buyers than outright performance. If Ford can make good on the promise that it will match the Crown Vic’s durability, and can prove that its Ecoboost engine will reliably offer better efficiency than the Dodge and Chevy V8s, it might make an argument for itself. But in a world where police departments are actually hoarding Crown Vics, there’s always going to be resistance to ditching the rear-drive V8 model for the perceived complexity of AWD and a turbocharged V6.

But because the performance differences between the Chevy and the Dodge are relatively small and because performance isn’t the overriding concern for police fleet buyers, Dodge’s lap record at MSP testing may be the most significant achievement in this year’s MSP testing, for reasons that have nothing to do with prospective police sales. With the Crown Vic gone and the competition for the definitive police vehicle thrown wide open, these annual Michigan State Police tests are beginning to take on the feel of a classic Detroit proxy war, not unlike the illegal drag racing that took place on Woodward Avenue at the height of the muscle car era. And because Dodge offers high-performance versions of its Charger to the general public, its ability to beat back the Australian-built, unobtainable-to-civilians Caprice could give it something of a halo to enthusiasts. Even Ford, which sells a Taurus SHO that’s not entirely unlike the new Interceptor, can leverage police performance testing results into a brand halo. Only GM, which stubbornly refuses to offer the Caprice as a civilian model, seems to be oblivious to the civilian-market implications of what is rapidly becoming an annual Detroit showdown.

With racing becoming increasingly detached from the vehicles available for sale to the general public, police performance testing is one of the last factory-backed competitions between cars that are available for sale to the general public. In short, it’s the kind of spectacle that drove the muscle car era… and have since disappeared. As the brand that’s most dependent on continued sales of V8-powered, large  rear-drive sedans, it’s no wonder Dodge upgraded its Charger in order to come away with a narrow win this year. Maybe next year Chevy should hit back… and then capitalize on the rivalry by making a Caprice available to civilians.

The Michigan State Police have not yet released full test results for 2012 model-year vehicles. TTAC will post these results as soon as they become available. Past test results can be found here. 

I’ve often wondered if there is a relationship between the decline of the automobile’s cultural relevance, and the decline of the larger-than-life auto executive. Clearly the car’s waning ability to excite, inspire and shape material culture is a complex phenomenon with no single cause, but it’s got to have some kind of connection to the people making the cars. After all, the original Mustangs, Corvettes, and Model Ts emerged from firms led by such oversized presences as Lee Iacocca, Bill Mitchell and the original car-guy-as-folk-hero, Henry Ford. Today there’s no shortage of brilliant, engaging, passionate people working in the car industry, and yet few contemporary executives have made the kind of cultural impact that their predecessors once did. This, in a nutshell, is why Bob Lutz fascinates me: though he never made as wide of a mark on popular culture as an Iacocca or DeLorean, he’s one of the last remaining links to an era in the car industry that now seems impossibly out of reach.

But because he is not a man of the times, it’s incredibly easy to misunderstand the guy. In fact, having spent several hours chatting with him on and off the record, I’d argue that the best anyone can hope for is to simply not misunderstand him. In that spirit, I’ve assembled ten impressions of the man that I found not to be true in our conversation. But be warned: just because these “myths” aren’t completely true doesn’t mean they’re completely untrue either…

1. Bob Lutz is calculating about his own image.

This is a bit of a tough one to start with. Even as I write this, I can hear the clamoring from the comment section. “He got you, Ed,” you’re thinking. “So much for that journalistic toughness, you got played by a master.” But bear with me. Clearly Lutz has a well-defined persona: the cigar-chomping (he puffed an enormous stogie throughout our interview), martini-drinking, Cobra-driving, jet-piloting, hard-charging corporate warrior. And there may well have been a time when he worked at that image. But having spent some time around a number of latter-day execs and PR guys, the directness with which Bob Lutz engages you, his apparent lack of internal filters, is one of the major impressions I left our interview with. Even when his answers to a question skewed more towards self-serving rather than purely truth-serving lines of logic, they emerged almost as soon as the question was asked with little of the pause for calculation indulged in by modern execs (this was particularly surprising when he was faced with questions he clearly wasn’t expecting, like “why are GM cars so heavy?”). Reasonable people can disagree over whether there is daylight between his truth and their personal version of the “objective truth,” but  he tells his truth with the spontaneity of a person with no concern for what the world thinks of him. Indeed, over the course of our conversation I picked up the distinct impression that Lutz would rather be seen as complex, even contradictory, than consistent. And by the time I left his pied-a-terre outside Ann Arbor, I had a less concise idea of who the guy is than when I arrived.

2. Bob Lutz hates the media.

In his most recent book, Lutz rails at length against the media, assigning it what I believe to be an unfair share of the blame for the decline of GM. Heck, he even calls The Truth About Cars “a website that often offers anything but”… for a headline written by a New York Times editor.  And yet, nobody held a gun to his head and made him invite me to his own home for an extended conversation. And because he did invite me, I was able to ask him about his relationship with the media. We were talking about the politicization of the Volt (see myth number three) when the subject came up, so I asked Lutz: “you devote quite  bit of the book criticizing the media, and yet most people in the media feel that you’ve always been pretty well treated…” Lutz jumped in

I was, yeah. I have no complaints about my personal treatment, I mean, I always got along well with the media, and that’s globally… I think they recognized that I was a force for the good. No, I’m talking about the way the media generally treated the US car industry. We had a colleague of yours from Der Spiegel magazine in Germany… he asked “what were the factors behind the decline of the American car industry,” and I said, well, you know, I mentioned the US media. And he said, “you know, this is a curious thing because this is the only country that I know of where the media routinely trashes the domestic product. He said “the German media thinks Volkswagen, BMW, Porsche Audi are wonderful. Opel and Ford of Germany are semi-wonderful because they are, after all, American owned. French cars, well, if you must and the Italians and Japanese… yes, yes, they’re getting better, but they’ll never be [a German car]. Same thing in France. Japan. Korea.”

I’m not for a chauvinistic media, it should be objective and realistic, but with the American media you could put out some pretty good stuff and it was… dismissed. Dismissive was the best you could hope for. The Cobalt was routinely trashed in the media, but every time anyone actually drove a Cobalt, they said “this is a nice little car.”  It’s very refined… it’s peppy, has good brakes, good steering, the interior is… OK… seats are nice. I mean, it’s a nice little car. It deserved a lot better press than it got. I’ll put a Cobalt against a current generation Corolla any day.

Now, this whole rant was not unlike what appears in Car Guys, and it hardly disproves myth number two. But here’s the thing: I had driven a rented Cobalt out to Lutz Farm, and he was right. It was nowhere near as terrible as I was expecting. And looking through TTAC“s Cobalt review archives, the conclusions certainly belie TTAC’s reputation for GM bashing. Because Lutz has some valid complaints (there’s another that I’m saving for a final installment of “Cars Only Bob Lutz Remembers”), and more importantly because he only seems to really care about what the media said about his cars, I don’t get the sense that there’s as much personal animosity as comes through in Car Guys. On the other hand, I’m also not convinced that the media isn’t something of a convenient villain for the Car Guys narrative, and that Lutz gives it too much credit for the downfall of GM.

But all that aside, when pushed with the fact that Toyota reviews now feature the word “beige” with the same consistency that Buick reviews used to feature the word “elderly,” Lutz admit that

there’s a gradual change in how American cars are being treated in the American media. The Toyota troubles forever destroyed the myth of Japanese invincibility and superiority.

Now that the shoe is on the other foot, and Toyota, rather than Buick is getting the “one-note” treatment from the automotive press, Lutz seems less concerned with the media’s failings.

3. Bob Lutz is a right-winger.

So, obviously Bob isn’t a left-winger. His views on global warming, for example, are well-documented. But if you tease out the politics that he weaves throughout his answers, what emerges is a man well out of step with the modern right wing. He sings the praises of socialized healthcare as an issue of economic competition, arguing that placing that burden on private business puts manufacturing industries at a disadvantage. He argues strongly for an “intelligent” gas tax, on the grounds that oil price volatility wreaks havoc on product planning. He even concedes that the latest version of CAFE is not totally objectionable. And when it comes to the Volt, he has nothing but contempt for what he calls the “extreme right wing” that tried to publicly kill it. When I asked if the politicization of the Volt was inevitable, or if it had something to do with the car itself, his immediate answer was unequivocal:

I think it predominantly had to do with the extreme right wing media, who will grasp at anything, right, wrong, accurate, inaccurate, to attack the Obama Administration.  The Rush Limbaughs, the Glenn Becks, the Mark Levins… these guys said “how stupid is this? This is the kind of car you get when the government owns a car company.”

Again, the guy has a point. When, in my NYT Volt Op-Ed I had written “In short, the Volt appears to be exactly the kind of green-at-all-costs car that some opponents of the bailout feared the government might order G.M. to build. Unfortunately for this theory, G.M. was already committed to the Volt when it entered bankruptcy,” Rush Limbaugh quoted the first sentence repeatedly and left the second sentence un-quoted. But Lutz wasn’t done attacking the right:

“…and,” [said the right-wingers], “this thing is so bad, the government is going to offer you a [$7,000 tax credit] to get you to buy it. The same government that is forcing this on the American public is, in addition, going to spend your tax dollars to get you to buy it.” Conveniently forgetting, of course, that the [tax credit] went in under the Bush Administration. GM was the target of the extreme right. If they hadn’t have worried about a backlash (which would have inevitably happened), they would have cheerfully organized a right-wing boycott of General Motors.

Regardless of how Lutz feels about any one political issue, his ultimate loyalty is to Detroit, to the American car business. After all, have you ever heard a right-winger argue that

it’s silly for us to be paying $3.50 per gallon when Europe is paying $7 or $8 dollars per gallon

?

4. Bob Lutz only cares about extreme cars.

Even though we were sitting in an office festooned with models of yellow HUMMERs and billet Cadillac Sixteens, as soon as I mentioned that he was best known for his “emotional” cars like the Viper and Solstice, he cut me off

That’s a little bit unfair because I was highly instrumental in the second-generation Chrysler minivan, you know, the great big round one. At its heyday we were doing over 500,000 of those things each year and they were ringing the cash register like mad. I also get very excited about full-sized pickup trucks and sport utilities… I mean, I lavished so much affection on the current generation of GM sport utilities and pickup trucks. Supporting design in certain things and then getting the body gaps down to, like, Lexus-minus tolerances and getting beautiful interiors in… still, I think the Tahoe and Yukon have, for a mass-produced SUV, still one of the nicest interiors around. And of course the Escalade is off the charts… it’s “bling,” but it’s beautifully done.

So, I get just as excited about stuff like that as I do about a Corvette ZR1… in fact, maybe more so. The Lambdas, for instance… one of the beautiful things when you see an Acadia, Enclave or Chevy Traverse, is that beautiful taper towards the rear. You know, the way the body goes from near-vertical, to where it starts to roll in gradually, and you get that lovely tumblehome from the back which makes it look so stable. It gives them that dramatic appearance on the road. When they started out they had straight bodysides, like a Honda Pilot, and I said “why are we doing that?” “Well, it increases rear seat width and maximizes the internal cube.” I said “guys, that’s not what it’s about.” They also said “there’s one more thing. If we do it the way you want, we’ll never have a version with sliding doors.” I said, “well, we’re not doing a version with sliding doors.” [As a result], I think the Acadia, Enclave and Traverse are, from a body-surfacing standpoint, some of the best work done by the American industry.

So, why did it take so long for Lutz to put his touch on the Malibu, GM’s entry in the most important mass-market segment?

Yeah, [chuckles], three, three-and-a-half years. That’s normal. I had to live with the stuff that had been done before.

5. Bob Lutz hates “bean counters.”

As I point out in my review of his most recent book, the title “Car Guys vs. Bean Counters” seems almost to be more a reflection of the author’s internal complexity than a description of an actual battle within GM. Lutz has spent enough time in the business world to know that no business can survive with creative chaos or stifling discipline alone. And just as GM as a whole ebbed and flowed between the creative power of design and the disciplined control of finance, Lutz acknowledges that it takes a balance of two very different instincts to create a successful business. He admits:

The beanies do their job. I’m all for finance, financial controls, cost-cutting and tough discipline… I did it myself… for instance, the Malibu LT2 had a regular aluminum wheel with very shiny, circular machining on it. The LTZ wheel had finer machining, to where it almost looked like the surface of a compact disc. The guys showed them to me and said… “there’s a forty buck difference, it’s ten dollars a wheel.” I said “take it out.” [Costs] get in that shouldn’t be there in the first place. You just can’t let the beancounters be in charge and philosophically drive the organization… because that’s when it gets off track.

Indeed, the king of the car guys has an MBA, not an engineering degree, and his entire argument for his turnaround of GM was predicated on a beancounter’s argument: if controlling the bottom line is killing you, do something about the top line.

The product development guys, whether at Ford, BMW, Chrysler or GM, liked my leadership because I insist on good rather than cheap. And it’s definitely paid off. The average transaction prices of GM cars are up so much it more than offsets, way more than offsets, the maybe thousand bucks I put into the vehicle.

6. Bob Lutz loves/hates electric cars.

Nowhere are Bob Lutz’s internal complexities better displayed than in the world of electric cars. To the EV enthusiast community he’s been both a villain of “Old Detroit”, railing against “the theory of man-made global warming” and the savior of the electric car, as internal champion of GM’s Volt.  In hopes of getting to the bottom of this mystery, I asked Lutz if he thought Nissan would gain a “first mover” advantage (alá Toyota’s hybrid advantage) over the competition by being first to market with a mainstream pure-electric car. To which he answered:

No. I don’t see the Leaf generating the “cool factor,” the “gotta have it factor,” the “this is the car to have factor.” I don’t see that in the media, it’s not generating any of the buzz you would expect from that. I think the Leaf is going to be a relatively low-volume vehicle. The problem is range anxiety. You hook a range extender onto that, which of course immediately drives cost for a second powertrain, but if you have a nominal 100 miles electric [range] plus another 200 on the gas engine if you need it… now you’re talking. But people with a pure electric, unless it’s got a 250 or 300 mile range… and the Leaf doesn’t even get 100 miles after a few years, or on a cold day.  So, the Leaf gets 70 miles on a good day and 50 miles on a bad day… meanwhile there are guys getting 56 miles  [of electric range] on the Chevy Volt.

In short, when the topic turns electric, Lutz wants to talk about his baby: the Volt. He half admits that the range-extended Chevy was a “PR exercise,” saying

PR has such a nasty flavor… let’s call it a “reputational adjustment exercise.” What the Viper did for Chrysler in 1992,  the Volt is doing for the Chevrolet brand [in an entirely different way].

And he argues that, although the Volt’s design is fundamentally less efficient over longer distances than a conventional hybrid or PHEV, that misses the point. “People want to drive 40 miles on electric power,” he says, “if you look at it through the eyes of the customer and not the EPA, they see it as ‘I’m getting 40 miles every day, practically for free.’” Is it, I asked, counter-intuitive to design a “green halo” car not to maximize efficiency?

It is if you look at a hypothetical usage profile. But we knew that 80 percent of Americans drive 40 miles per day, and the Volt is for them. I wanted to look at the real usage profile. An airplane engineer will tell you “you know, we can make this fighter much more efficient if we don’t add all the weight and complexity of an ejection seat”… but good luck finding someone to fly it.

Of course, even at a 70-mile range, the Leaf will still be able to get most of that 80 percent to work and back… especially if they can charge at work. But finding a consistent principle in Lutz’s opinions generally isn’t a question of analyzing any of these arguments. Though he wasn’t being paid by GM at the time of our interview, it was clear that Lutz’s principles are allied almost entirely with GMs. And if he has any regrets anything about the concept and development of the Volt, he isn’t ready to admit them.

7. Bob Lutz hates industry-outsider auto execs.

Though he rails against the “brand management” era of the 1990s, and the outside board members and packaged-good industry executives who championed it, Lutz is not entirely against outside influences on the car industry. He is not, as are many longtime industry insiders, completely convinced of the notion that  you must be steeped in the car business to understand the car business. Quite the contrary, he argues

Because we’re all trained the same way, a traditional automobile person from Ford, GM or Chrysler can move from company to company, and the way programs are created, the way they’re measured, the way they proceed through the approval process, the way they’re then finally executed… you hardly notice the difference. It is this finance-driven, metrics-driven approach that was originally put in by McNamara and the “Whiz Kids” at Ford… and it eventually translated to the whole industry. Ford Motor Company is so proud of the fact that they, I would call it infected, the whole industry with it. So, you take some 30-year veteran of that system, they know how that works, they know those rules, they know you set tough cost targets and then you turn the crank again and you drive costs down some more, the top line is more or less assumed, the argument that if we make a better car it will bring in more money just is not recognized. The top line is the top line, don’t mess with it.

So if [post-bailout GM] had gone back to some veteran automobile guy, there would be a high risk that we’d lose it. Again. But the fact is that all the Detroit Three are run by non-traditional Detroit guys, and the way Dan Akerson and Dan Ammon look at it,   is “30 years of doing it the wrong way resulted in decline and ultimate failure. Now, with a focus on excellence, and willingly doing the best engineering and manufacturing that we possibly can, do not skimp, don’t try to substitute margarine for butter…  now our average transaction prices are up four or five thousand dollars.

Though a product of the system he derides, Lutz was able to see its fatal flaw: a fundamental lack of desire to improve the top end. Convincing outsiders that you can “leave the butter in” and see investments in product quality generate much larger returns in transaction prices (again, a “bean-counter” argument, at its heart) was actually easier than convincing executives steeped in the Detroit business model. And in the old days of GM, changing the basic approach to the business was nearly impossible due to what he calls a culture of “genteel arrogance.”

It wasn’t an aggressive arrogance, and it wasn’t an active arrogance. It was a passive, genteel arrogance… somewhat like medieval aristocracy dealing with the peasants. Infinitely polite, fair… [mimics an upper-crust Mid-Atlantic accent]  “yes, that’s a good point… I don’t think we’ll be using your idea, but thank you very much.” So it was always very genteel, but it stemmed from this somewhat inbred culture that never drew people from the outside. It was almost a world of its own, and it was bred in the 50s and 60s when GM inarguably had total dominance of the market.

So, once his “top-line” argument started being taken seriously by Wagoner, the post-bailout influx of outsiders actually helped build support for his ideas. He recalls being told by one of GM’s new senior execs that “your fingerprints are all over this company,” and from the sound of that anecdote, there are no plans at the top of the Ren Cen to get away from Lutz’s basic philosophy. The contrast to the “brand management” days is clear: then, outsiders came in thinking they knew it all; now, the outsiders are steeped in the Lutz philosophy. No wonder the tune has changed.

8. Bob Lutz hates Toyota.

Lutz agreed that Detroit-based car executives “had good reasons to dislike Toyota,” but one of the biggest surprises of our conversation came when I asked if Toyota were owed some credit for its innovations.

Oh, absolutely. I don’t think they’re great at product creation… I’ve always said Toyota is vulnerable because the only image component that is driving sales is reliability and resale value, and if they lose [those two qualities], God help ‘em. The cars look average, they drive average… I mean, let’s face it, they’re bland-mobiles. It became a default purchase for people who knew nothing about cars, and didn’t care about cars… and sure enough, [the reputation for reliability and resale value] was true. And, early on, Toyotas were also beautifully finished, inside and out. Even a Camry or Corolla had a beautiful interior… not so much any more.

But, there was no doubt that Toyota’s success lay in the actual manufacturing of the car. The Toyota Production System, Just-In-Time inventory, error-proofing, Andon cords in the factories, the blend of human operatives and automation… all of that stuff, we undeniably learned from Toyota. If you have a bracket that has to attach to something, Toyota  would engineer that bracket in such a way that you could not mount that bracket upside-down. The whole industry was transformed from… looking back, you almost have to say haphazard manufacturing and quality control to designing a process flow in manufacturing that almost guarantees you perfection with every single vehicle. So, all the credit in the world to them for that.

I also think they had a very good and productive relationship with their suppliers, which we didn’t always have. Detroit keeps slipping into these periods of “let’s beat the hell out of [suppliers] and suck all the profitability out of them because it belongs to us”… with devastating results each time. They also showed, maybe by default, that you maintain residual value by not oversupplying the market. We would oversupply the market… “alright, another 50,000 into daily rental”… it looks good in the short term, you make the numbers, you make your market share, and then you wonder why the two-year-old off-lease Malibu was worth only 38 percent [of its original value].

This last bit is pretty key to Lutz’s “bean-counter” argument about improving the top-end of the business. That he learned the lesson at the hands of Toyota and manages to give credit where it’s due is a compelling admission, given GM’s notorious reputation for “not invented here syndrome.” And later in the conversation, when the new Camry came up in passing, he remarked

Apparently they were able to take 250 lbs out of it, while maintaining structural rigidity… everyone says it’s not a bad car… good for them.

Apparently he even has more respect for Toyota’s product development than you might think.

9. Bob Lutz can’t admit a mistake.

The quote above might be enough to show that Lutz is more reflective and self-critical than his “damn the torpedoes” public image would suggest, but his most significant admissions of failure have to do with GM. The on that is most damning, in my eyes, is his admission in Car Guys that he was not enthusiastic about GM’s expansion into China. Had Lutz been in charge, you could make the case that a late entry into China would have damned the company to bankruptcy years earlier than 2009. But there are other, more concrete examples of mistakes that he heartily admits to… mistakes in his own area of expertise. None looms as large as the GMC XUV, a vehicle he calls a “disaster.” And though he discusses this incident in the book as well, in our conversation he connects the episode with his critique of GM’s culture: executives at GM were, by and large, too smart for their own good. And Lutz himself, a man with no lack of confidence, found himself overwhelmed.

There were some times when I deferred to the GM people because they seemed so smart and seemed to have done their homework so well and they were so convincing and the PowerPoint presentations were so great. I felt like I was dealing with people of a really superior intelligence… and I was! That’s how the GMC XUV happened. I just got myself convinced… I hate it, but that doesn’t mean anything. I may not be the customer for this sort of thing, but these people have done their homework and we’ll let it go.  That one proved to be a waste of about $275 million, down a rathole, for nothing. That vehicle was a joke.

This anecdote goes against the grain of the bean-counter-slaying Bob Lutz narrative, but it also confirms a basic premise of his philosophy: being too smart is as bad as being dumb. Over-thinking things can lead to as many bad decisions as it can avoid. And if Lutz is going to admit a mistake, it will typically be a mistake caused by the head winning out over the gut.

10. Bob Lutz is old and out of touch.

When I showed up at Lutz Farm for our conversation, it never occurred to me that Lutz was just days away from returning to the payroll at General Motors. I knew he had been doing some “consulting,” but I didn’t imagine that he was as involved in decisions as he is. Indeed the first hint that he might still carry significant weight inside GM’s product development organization came in the answer to my very first question, in which I asked him to compare his time at Chrysler with his time at GM. After some background he explained

First of all, when I arrived at Chrysler, I didn’t have the all-encompassing powers over product development that I do now.

Part of me wanted to ask him how much I should read into that little  Freudian slip, but Lutz was off and running and I spent the next several hours just trying to keep up. And really, it would probably be a better question to ask Mary Barra, the relatively unknown actual head of product development at GM.

In any case, Lutz’s continued involvement at GM has raised more than a few accusations that “it’s time to let Lutz go” and that “the old man is past his prime”… but I saw nothing that led me to believe he couldn’t be helpful to a young exec trying to take charge of GM’s product development. When he was serving espresso before the interview began, I thought I saw his hand shake almost imperceptibly… otherwise, I wouldn’t have pegged him for a day over 60. For hours he puffed his cigar and kept up with my often-abstract questions, answering them rapidly, deploying pop-culture-references and decades-old anecdotes alike. His phone and Blackberry  chimed relentlessly throughout the interview, and he would sometimes interrupt the interview briefly to fire off Blackberry messages with the dexterity and nonchalance of a 13 year old.

I certainly hope to be in his shape when I reach 79… and anyone fascinated by the world of cars would be glad for the opportunity to spend part of an afternoon listening to his prodigious perspective. There’s no doubt that Lutz is a man from another time, but he’s also a man with the grit and determination to stay remarkably relevant in a rapidly-changing world. Agree or disagree with him, love him or hate him, Bob Lutz is a living link to an automotive era that seems unlikely to return… and from which the industry can still learn a lot.

TTAC’s Twitter followers already know that I’m at the 2011 APEC Transport/Energy Ministerial Meeting in San Francisco, rubbing elbows with key decision-makers from the world of energy and transportation across the Asia-Pacific region. Earlier today I had the opportunity to sit down with Better Place CEO Shai Agassi, the intense, formidable CEO of Project Better Place. I’ll be writing about that conversation shortly, but many of the major points are covered in the speech Agassi gave shortly afterwards to assembled ministers, media and businesspeople. The speech boils down Better Place’s hugely ambitious plan to tackle one of the most complex challenges the world faces: transportation’s dependence on oil. If you’re looking for an Al Gore-style “green” speech, keep looking. Agassi tackles the problem from an economic and technological approach, and he makes a case that is well worth about 17 minutes of your time.

If you’re not familiar with Better Place, you can read some of TTAC’s coverage of the battery-swapping, network-managing, mileage-leasing project at our Project Better Place tag here (much of it on-the-ground reporting from Tal Bronfer, who has been following its rollout in the Israeli market). A comparison of battery swap to other EV business models can be found here, and a study of EV grid management issues can be found here.

The theme that’s emerged most clearly from my interview with Bob Lutz was, somewhat counterintuitively, compromise. Every vehicle that’s developed and built is the product of nearly countless compromises, on everything from performance to efficiency, and from weight and materials to cost. The question isn’t so much if you compromise when developing a new car, but how you compromise… as was demonstrated in our last Lutzian anecdote. And even during my interview, as the conversation bounced from GM to Chrysler, from mass-market products to niche halo cars, I was thrilled that this issue kept coming up. Why? Because this theme played perfectly into the question that was at the top of my list of prepared questions. After all, there has been a mystery haunting GM followers for some time now… a mystery that I’d never seen a journalist ever ask about. And there I was, sitting with one of the few people who was even capable of fully answering it. So I just waited for a pause, opened my mouth and asked:

Why do GM cars weigh more than other cars?

I had no idea what kind of answer to expect… but I definitely wasn’t expecting the answer I got.

To be perfectly honest, I half-expected an angry denial or a brush-off… possibly even a signal that the interview was over. In the car world, weight is extremely important to engineering cultures and enthusiasts alike. The former see low weights as the achievement of engineering excellence in the abstract, while enthusiasts enjoy a low mass vehicle’s inherent advantages in handling, acceleration and efficiency. Ever since Colin Chapman built Lotus around the philosophy “simplify and add lightness,” curb weight has been the measure to look at for in-the-know-enthusiasts. And there I was asking a guy who was still informally advising GM, and would be officially back at the company a week later, why his cars were fatties.

Of course he couldn’t exactly deny the fact. Chevy, for example, won’t let you use its online “competitive comparison” system to compare weights, but if you go through the comparisons by hand you’ll find the weight of every GM car is at least a little heavier than the competition. Sometimes the extra weight isn’t much: for example, a base, four-cylinder Camry weighs 3,307 lbs to the four-pot Malibu’s 3,421. But go to the C-segment and you’ll find that a Cruze with automatic transmission weighs 3,102 to the Corolla’s 2,800 and the Civic’s 2,672. Similarly, a base Equinox is four hundred pounds heavier than a comparable CR-V. No wonder then, that Chevy struggled so long with fuel economy and the perception that it “couldn’t make a good small car.”

But if Lutz thought through all this before answering, he didn’t let it show. There was only the briefest pause as he considered the question, before the answer came:

Um, I’ll take part of the blame for that…

Huh? Really?

I said look guys, these vehicles are going to be robust, strong, I want a great ride, an absence of any noise, vibration and harshness, I want these things to be super-silent. So the guys put in heavy-duty components… also, Ed Welburne and I like big wheels, and the minute you say the minimum wheel size is 18 inches, you’ve automatically  bought yourself an extra 50 lbs of weight. We willingly and knowingly made decisions in favor of design and appearance and noise, vibration and harshness… all the things that make a vehicle feel substantial. You know, everybody cries and moans that the Buick Enclave is 400 lbs too heavy, but it’s the last thing on the customer’s list. They don’t worry if it’s 400 lbs overweight or not, they love the way it rides and drives.

And, you know, we did a lot of programs very fast, so there wasn’t always time to go back and say “gee, could we make this part out of something else?” So I will cheerfully admit that making weight reduction targets was my lowest priority… and it shows. But other than the automotive press, nobody cares about it.

And there you have it: if Lutz were simply a “car guy” in the mold of the most fanatical enthusiasts, there’s no way he would have run GM’s product development that way. But, beneath his “true-believer,” “engineers-first,” “car-guys-versus-bean-counters” image, Lutz is still a corporate executive first… a species more closely related to the “bean counters” than the “car guys” we all know from outside of the industry.  For all the passion he puts into his cars, he’s not developing them for himself. And for all of his public contempt for finance and “running a business by the numbers,” he’s always got an eye on what the majority of car buyers, not the aficionados, are looking for. In fact, it’s quite likely that most self-identified “car guys” who don’t work inside the industry would argue that Lutz’s priorities are as anti-car-guy as possible. After all, how can you truly claim to love a car in which you’ve concentrated all of its compromises into extra weight, the enemy of fun and efficiency? Since when do “car guys” trade hundreds of pounds of extra weight for a quieter ride?

Lutz didn’t provide too much more insight into this issue, sticking with his assertion that consumers simply don’t care about extra weight. And if asked in the abstract, it’s hard to imagine many “average consumers” placing “low weight” high on a list of priorities. But it’s clear that Lutz’s absolute emphasis on ride and refinement won’t last at GM, because weight simply isn’t abstract. Even if consumers don’t care about its effects on handling, as gas prices rise, they’re starting to care more about its effects on efficiency. And Hyundai certainly doesn’t seem to have compromised style, the all-important priority in the Lutz approach to product development, in order to bring down weight and achieve leading  fuel economy. So, is weight reduction going to become more important for GM? According to Lutz

Is it something that is being addressed? The answer is “you bet it is,” because it’s going to be harder to make fuel economy regulations with a heavy car. The guys are already doubling back on it. In the next generations they’ll get the weight out and hopefully still maintain the structural rigidity.

And on that note, Lutz whip-cracks back into “car guy” mode, singing the praises of beaming and torsional rigidity, saying “if you get that right, you’re 90% of the way to a great car.” Then, as I’m still struggling to remember a time when someone said “I love this car, but next time I’m going to buy one with more beaming rigidity,” the subject shifts again to CAFE regulation. I’m hardly an experienced interviewer, and my head is still spinning trying to make sense of what I’ve just heard, so the conversation flows on. I’m still not sure I understand why GM’s cars had to be so much heavier, but at least I know who to blame for it… if anyone actually cares.

Bob Lutz admitted in his book Guts that he “possesses a certain duality of mind,” and he ain’t kidding. After all, how could someone spend a career in an industry built on “the industrial logic of scale” (to borrow a phrase from Sergio Marchionne) while trying to connect new vehicles with the lust centers of the human brain without developing a certain amount of creative schizophrenia? But, as anyone who has ever driven a Pontiac Solstice knows, sometimes compromises are made between the conflicting pulls of lust and practicality… and when those compromises must be made, Lutz tends to err on the side of lust. I confronted him about this tendency in our recent conversation, and rather than accept the criticism, he doubled down on his premise that lust-worthy design is more important than practicality. And he illustrated his point by telling the tale of a long-forgotten concept and its troubled path to production.

The story began, almost inevitably, when I asked Lutz if he had any regrets about the Solstice/Sky “Kappa” program. Did he ever second-guess himself on design decisions made in that program, I wondered. Was practicality unnecessarily sacrificed? Would more usability have had any effect on sales of the Solstice or Sky? After the briefest moment of reflection, Lutz answered with a fairly emphatic negative. But rather than leave it at a simple “no,” Lutz unfolded a parable about product development that began the year after I was born.

Do you remember, we did a two-seat Fiesta roadster at Ford of Europe one time? I forget what it was called… we didn’t call it a Speedster, but it was… I guess it was kind of like a Porsche Speedster. If you Google it… it had a unique body… I think we showed it at the Geneva show… 84 I think.

It was a really neat looking car with a very fast front end. It kind of reminds me of the BMW Z3 because the hood had to stay level for a while to clear the engine and then it dropped off sharply. It was a two-seat roadster with a very short back end… the wheels were all the way in the back. It was cute as all get-out… but the functionality was probably close to zero. No back seat, no trunk, nothing… just a very basic, low-cost, two-place roadster.

Lutz remembered the car, he just couldn’t remember the name. With a little Google wizardry and a lucky stumble across this blog item, I found the name: the Ford Ghia Barchetta. And he was only off by one year… apparently the Barchetta debuted in 1983. He was also right about the looks: in many ways it seems like the inspiration for Fiat’s wildly-successful (and gorgeous) front-drive Barchetta, which was built from 1995 until 2005 with only a brief pause. But now we’re getting sidetracked… back to our story, already in progress, with the first compromise made to the concept:

I wouldn’t let them change the engine placement. I said “if we have a chance of putting this into production,” (which I really badly wanted to do), “we have to keep the Fiesta underpinnings.”

So far, so good. But here’s where the story becomes a parable.

I needed some volume to make a viable program out of it, so I figured we could probably do eight or nine thousand of them in Europe, and we gave it to Ford NAO (North American Operations) and said “what can you do with it?”. They did some Supermarket parking lot surveys and they asked women coming out of the grocery store “what do you think of this?” They said “oh, it’s cute. What would it cost?”. “About eight thousand dollars.” “Oh, that’s a lot of money.” And then [the Ford NAO people] said “aaand, you can have this four-cylinder Mustang convertible for $7,800.” “Oooh,” they said, “well I’ll take that.” So they concluded there was no volume potential in the United States… and of course there was, they were just asking all the wrong people.

This encapsulates why Lutz deserves at least some grudging praise from even his toughest critics: lust is difficult to make a case for in the auto business. Simply trying to convince Ford’s US-market fiefdom that they would benefit from such an unusual vehicle in their lineup was an insurmountable task that he tackled anyway. As the romance and enthusiasm slowly drains away from the world of cars, very few executives risk their careers for exciting products that might not make immediate business sense. Sure, this risk-taking seems less laudable in the aftermath of the bailout, but it’s integral to the cultural power of the automobile. And, as the story continues, we’ll find that if you’re going to take a risk on a niche product, you better really take a risk on it.

Then Alex Troutman at [Ford Asia-Pacific] got interested in it for Asia-Pacific, and went and talked to Mazda. Mazda said “no, we don’t like that one because it’s front-wheel-drive, but we’re actually thinking of doing something like that with rear-wheel drive. And Alex said no, ours has got to be off a Ford architecture.

If Lutz had any regrets about not involving Ford in the creation of the Miata, he didn’t let them show. On the other hand, the missed opportunity had to sting at least a little. After all, if you’re taking a risk on an impractical two-seater, why not go all the way with RWD? And with the benefit of hindsight, involvement in a modern icon like the MX-5 would be a point of pride for any “product guy.”  But Lutz only had control over Ford of Europe, and by this point he had even lost control of the Barchetta project. It was about to become everything it wasn’t ever supposed to be.

When Alex went back to the states, he got [the program] going again. It was carefully researched, so it was decided that front wheel drive is OK, but we don’t like the front end. So, OK, the front end got more conventional. Then, “it’s no good with no back seat. People won’t buy a car with no back seat.” Well, OK, we can add a back seat. And then, “oh, there’s no trunk space.” Alright, add a trunk. And so it became that misbegotten little Mercury [Capri], remember that? What a horrible thing. That started out as the Fiesta.

That started out as a beautiful, slick, highly desirable little roadster that would have done well. Functionalizing it wrecked it. And I’ll tell you what: Solstice owners had no problem with that top at all. When you’re into emotional cars, it’s about appearance and how cool is it… it’s the same thing as sports motorcycles. Not necessarily comfortable, not suitable to saddlebags… but they look like track bikes and they’re fun to ride.

I know that not all of TTAC’s B&B will agree wholesale with Lutz’s vision, but the tale of the Barchetta’s transformation into the Capri is instructive. When you have a successful design, and cardesign.ru cites Ford press releases saying the German “Barchetta Club” alone had 10k members at one point, you keep it as pure as possible or you don’t build it all. It’s easy to criticize Lutz as being too uncompromising, but in an intensely collaborative process like car development, the ability to say “no dammit, we aren’t going to compromise on this” is a rare thing. If the world were full of cars that are as practical as they are fun, his approach might be dismissible. Since that’s not the case, this is an object lesson in the trade-offs that create crap like the Capri out of a tiny jewel like the Barchetta.

Knowing that some of the top PR professionals in the business are regular readers of TTAC (they could be anyone…), I can imagine a number of them shaking their heads in disapproval at the headline of this post. “It’s happened,” they’re probably muttering to themselves, “TTAC has finally lost the plot.” But instead of dismissing out of hand the seemingly preposterous premise of this post, I ask the assembled anonymous masses of PR pros to bear with me for a moment. As laughable as it might seem to postulate that the industry’s spin doctors can learn something from the most infamously “off the reservation” auto exec ever, the urge to write off this post is part of the very problem I hope to tackle. Allow me to explain…

With the depth of the financial crisis-precipitated recession behind us, and the auto industry showing some signs of returning to normalcy (if not the “old normal”), the temptation to rely on proven practices must be greater than ever. But although the industry is doubtless in better shape than it was a year ago (let alone two years ago), this is no time to sink back into complacency. Beneath the short-term shocks of the last several years, is a rising tide of more subtle challenges which are all-too easy to ignore. From weak products to increases in traffic, from government regulation to the social sphere’s shift towards the online world, a number of factors are conspiring to hollow out the industry’s cultural relevance, especially in “mature markets.” In Japan, the decline of the automobile has been so dramatic it’s even inspired a name for the emerging post-automobile order: kuruma banare. And if business-as-usual continues in the US, we’ll see that trend pick up pace here as well.

So, you might be asking yourself, what does this have to do with PR? After all, the in-depth studies of kuruma banare identify it as the product of a number of trends (referenced above), many of which seem unavoidable. Though I wouldn’t pretend to have a definitive answer to the waning cultural appeal of automobiles, I am convinced that a paradigm shift in how automakers view and practice PR is the first step in revitalizing the image of the most powerful and sophisticated consumer good on the market. And the core of that shift can be found in, of all places, the writings of one Robert Lutz.

In his first book, Guts, the then-recently retired Chrysler product development boss laid out seven idiosyncratic “laws of business,” with such blasphemous titles as “The Customer Isn’t Always Right” and “Financial Controls Are Bad!” They’re the kind of “laws” that, on the surface, add to Lutz’s reputation as “overly opinionated” and a “loose cannon,” but for an industry built on consistency and process, they represent an eye-opening counterpoint to conventional wisdom. Which is, in my mind, precisely what is called for to combat a rising tide of automotive apathy.

For the purposes of this piece, let’s concentrate on Law Four: “Too Much Quality Can Ruin You.” As a consummate “product guy,” with a well-documented disdain for the entire business of PR (more on that in a minute), Lutz doesn’t mention spin-doctoring in his law, but the core of his argument applies nicely to it. Towards the end of the chapter on Law Four, he sums up:

“Given two extremes- “zero defects with no delight” and “delight with a few squeaks in it”- the public will always buy the latter.

Lutz revisits the theme in his latest book, Car Guys vs. Bean Counters, in which he publishes a memo he circulated through GM shortly after arriving there, aimed at repairing its moribund new product development system. In the last of ten rules with which he hoped to smash GM’s institutional reluctance to develop great products, he writes

Remember the Bob Lutz motto: “Often wrong but seldom in doubt.” None of us is infallible, and we all make errors. Remember baseball, where a batting average of .400 is unheard of! But pushing and arguing for what you believe to be the right course (while recognizing you just might be wrong, therefore, still willing to listen) is the key to moving forward. Errors of commission are less damaging to us than errors of omission. In our business, taking no risk is to accept the certainty of long-term failure. (Even Aztek, in this sense, is noble!)

This approach is essentially Lutzian, producing occasional “sins of commission” like the Pontiac Solstice’s compromised ergonomics and practicality, but also fundamentally changing the image of GM’s products. Apply this line of thinking to the world of PR, instead of just product development, and you’ll understand the essence of my argument.

Public Relations, by definition, is about creating a product: positive news and analysis about your company. And the higher “quality” this product is, the better your career as a PR professional will be. But what is “quality,” actually? With apologies to Robert Prsig, the best synonym in the industrial context is “consistency.” Consistently good news, generated with consistent regularity is the “product” the PR professional aspires to. Everything else is to be avoided or suppressed. But what few, if any, PR professionals (or the people who employ them) seem to understand, is that “too much quality” can kill PR strategically, even as it achieves tactical goals (obvious “wins” and attendant promotions).

What the “quality” paradigm leaves out of PR is an understanding of the consumers of PR. Just as GM failed to understand that a sixth-generation Malibu design that had “zero compromises” (based on its internal product development rules) could be utterly mediocre and unappealing to consumers, Automotive PR professionals fail to understand (or accept) that an endless flow of perfectly consistent positive news is equally unappealing. Nothing about the millenia of evolution that has shaped modern man has prepared us for the kind of “quality” the PR business provides; The human mind thrives on contrast, deriving equal enjoyment from a thrilling roller-coaster one minute, and a warm drink and good book the next. We understand reality through the twists and turns of narrative, the interplay between hero and villain, the drama of the rising power and the crumbling empire. Modern PR provides us with none of these things, preferring blindered, parallel flows of positive information: a “perfect mediocrity” (another Lutz-ism) that interests only those who are paid to feign interest in it.

These thoughts had been rattling around my brain ever since I began diving into Lutz’s work in preparation for my review of Car Guys, and when I met Lutz in person for the first time last week, I shared with him an abbreviated version of the argument you’ve been reading here. To my surprise, the idea of applying his product philosophy to PR had never occurred to him, although he seemed intrigued by the parallels. And then it occurred to me that this was precisely the point: though he’s always exercising his own form of PR, he’s never spared a moment’s thought for the traditional or tactical practices of the PR profession. Which is precisely why he is, love him or hate him, the sole towering industry figure in the imaginations of car guys and auto journalists. Yes, part of his appeal has to do with other aspects of his product philosophy and the vehicles he helped create, but the fact that he has no internal PR “quality control” makes him wholly unlike anyone else in the industry. The wild inconsistency between his penetrating insights and his flamboyant (for lack of a better word) bullshit is the antithesis of industrial PR “quality” and the key to his appeal.

As I left his rural spread just outside Ann Arbor, it occurred to me (and not for the first time) that there might well never be another auto executive like Lutz again. If that’s the case, it’s hard to imagine the industry ever overcoming the relentless loss of relevance and excitement that’s occurred as high modernity fades in society’s rear-view mirror. Yes, the cars themselves are important. But the people who dream them to life, create them from raw materials, and represent and defend them in the public space have to live up to the huge social and cultural impact that cars promise. In particular, the PR pros have to learn that eliminating risk is, to quote Bob one more time, “to accept the certainty of long-term failure.”

The chief reason for the recent decline of the fortunes of Japanese automakers was not, as posited by pop pundits, the recalls or the tsunami. It was something more insidious, something regularly overlooked by most outsiders and many insiders. It was a reduction in development spending – an eventually deadly bottom line therapy also popular by cash-starved American peers. Japanese automakers have realized the error of their ways and have returned to funding the finding of that insanely great next generation car.

In the wake of the “Lehman syokku” or “Lehman shock” as they usually refer to the 2008 financial crisis in Japan, Japanese automakers drastically reduced R&D spending in an attempt to shore-up their bottom line. This is a tried & true tactic in the industry: if a disaster hits, cut R&D and advertising. The cashflow-positive effect of both is as immediate as snorting cocaine. The negative effect will not be felt until years later. In many cases, the problem is shifted to the next generation of managers who now have to sell tired technology to unenthused customers. The best medicine for car sales is new cars. Old cars are slow acting, but sure poison. A car takes 3 to 5 years to develop, medicine and poison become felt after long delays.

The epicenter of the “Lehman syokku” was America, and three years after, the American market is still wobbly. Car companies most exposed to the syokku – American and Japanese – put spending into crisis mode. European companies were far less affected and mostly maintained their spending level. This explains why Volkswagen, Daimler, BMW et al are riding high, and why the friskiest Japanese car company is Nissan with its ties to European Renault. Three years after the syokku, we are beginning to feel the effect in earnest, and it will stay with us for a while until it is digested.

Japanese companies are reaching for the antidote: Increased R&D spending.

“Seven automakers plan to spend 2.09 trillion yen, up 10 percent from fiscal 2010,” reports The Nikkei [sub]. Converted to today’s dollars, that’s $38 billion, a good chunk of money. Japanese markers are “racing to develop the next-generation of environmentally friendly vehicles as well as low-priced models for emerging nations.”

Nissan for instance is seen increasing its R&D spend by 15 percent to 460 billion yen ($5.8 billion). Honda plans to spend more than 500 billion yen ($ 6.5 billion),” aggressively developing budget cars for emerging countries.”

Today’s announcement of a memorandum of understanding between Ford and Toyota, uniting the two firms’ pickup truck hybrid drivetrain efforts, took quite a few industry-watchers by surprise this morning. As the industry leader in hybrid technology, Toyota has limited past hybrid cooperation to licensing its drivetrain wholesale to Nissan and a patent-sharing agreement with Ford. Moreover, the last big alliance aimed at developing hybrid technology for full-sized pickups, the Two-Mode V8 hybrids developed jointly by GM, Chrysler, Mercedes and BMW, have been a huge flop on the market, with the German partners walking away from the technology after using it in only a single application each (X5/X6, and ML Hybrid). Though Toyota and Ford have worked together to prevent a messy patent war over hybrid technology, there was little to suggest that they would take the cooperation any further, let alone join forces to hybridize full-size pickups. But if you’re looking to the marketplace to explain the Ford-Toyota tie-up, you’re looking in the wrong place: this is all about the freshly-announced CAFE standard and its generous credit system.

Of course, that’s not how the move is being pitched… at least on the surface. But in his announcement of the deal, Toyota Executive VP Takeshi Uchiyamada makes it clear that the hybrid and telematics alliance is entirely focused on the US market, saying:

Our collaboration with Ford is a move to make hybrid technology more widely available in sport-utility vehicles and in trucks. Those kinds of models are indispensable to American customers. And providing them with our hybrid technology will help conserve energy and reduce output of greenhouse gas here in the United States. That was our thinking in considering the collaboration.

How does Uchiyamada-san know how “indispensable” full-sized pickups are to Americans? The issue of full-sized trucks has dominated the debate over 2017-2025 CAFE standards, with the industry and its allies intervening to lower truck standards and increase the credit loopholes that make it easier to keep pickups relatively thirsty. This had two effects: first, the lowering of truck standards confirmed that large pickups would be worth investing in over the long term, and second, one loophole in specific provides huge incentives to hybridize full-sized trucks.

I covered the rough outlines of this credit loophole in my write up of the proposed rule, but to refresh your memory, here’s what the rule itself [PDF] says about its hybrid pickup credit

The agencies intend to solicit information on technologies that offer significant increases in fuel efficiency and reduction in greenhouse gas emissions. We intend to propose a credit for manufacturers that employ significant quantities of hybridization on full size pickup trucks, by including a per-vehicle credit available for mild and strong hybrid electric vehicles (HEVs). This provides the opportunity to begin to transform the most challenging category of vehicles in terms of the penetration of advanced technologies, allowing additional opportunities to successfully achieve the higher levels of truck stringencies in MY 2022-2025.

In other words, not only did the government reduce the required rate of efficiency improvement for trucks to nearly half what it is for cars, they also went a step further by giving credits for specific (i.e. hybrid) technology. Absent these credits, it’s highly likely that truck-dependent manufacturers would have looked to diesel power as a way to cheaply provide high-torque, high-efficiency truck powerplants, but with the feds placing their finger on the scale in favor of hybrids, Ford has no choice but to invest in the technology. And as the only Detroit-based (and therefore heavily truck-dependent) automaker to not have access to the Two-Mode technology, Ford had to move fast to find a partner. Though Chrysler and GM’s Two-Modes may not have been successful so far, they at least provide the building blocks for future development.

Besides, as we read more about the hybrid pickup credits, it’s clear that even if the 2017+ hybrid pickups aren’t super-efficient, the credits make them incredibly valuable.

The agencies intend that access to this credit is conditioned on a minimum penetration of the technology in a manufacturer’s full size pickup truck fleet, with defined criteria for a full size pickup truck (e.g., minimum bed size and minimum towing capability). The agencies intend to propose that mild HEV pickup trucks are eligible for a 10 g/mi12 credit during 2017-2021 if the technology is used on a minimum percentage of a company’s full size pickups, beginning with at least 30% of a company’s full size pickup production in 2017 and ramping up to at least 80% in 2021. Strong HEV pickup trucks would be eligible for a 20g/mi credit during 2017-2025 if the technology is used on at least 10% of the company’s full size pickups.

The agencies will propose specific definitions of mild and strong HEV pickup trucks, but expect to include stop/start, regenerative braking, minimum motor power, minimum battery voltage value and minimum energy storage capacity, or similar types of objective metrics. The agencies expect that a “mild” HEV will include moderate hybridization and not just start/stop, and that a “strong” HEV will include launch assist.

Let’s assume for the moment that the Ford-Toyota pickup drivetrain, which each company will integrate into future vehicles independently of one another, meets the government’s requirement for “strong” hybrids. If you look at the changes in maximum truck C02 targets from 2017-2025, they increase by the following amounts:

2017-2018: 5.5g/mile
2018-2019: 3.1g/mile
2019-2020: 1.9g/mile
2020-2021: 1.9g/mile
2021-2022: 14g/mile
2022-2023: 15.2g/mile
2023-2024: 14.6g/mile
2024-2025: 13.9g/mile

But under this credit system, if ten percent or more of your truck fleet have “strong hybrid” drivetrains, each truck earns a 20g/mile credit which can be applied to under-complying vehicles, “banked” for future under-compliance or “carried-back” for past under-compliance. In theory, this also means that a 2017 model-year pickup that exactly met the maximum CO2 target for that year would add 14.5g/mile to the automaker’s fleetwide efficiency rating in 2018, without improving its efficiency at all. In 2019, it would add 11.4g/mile in credits without improving efficiency, by 2020 the credit would shrink to 9.5 and in 2021 it would still be adding 7.6g/mile in credits despite not improving since 2017. If, for example, Ford had decided it could meet CAFE in that window with diesel technology alone, it would only receive additional credits if it “significantly” overcomplied with the standard, year-by-year. To wit:

The agencies also intend to propose a performance based incentive credit for full size pickup trucks which achieve a significant reduction below the applicable target. This credit could also be on the order of 10-20 gm/mile vehicle. The same vehicle would not receive credit under both the HEV and the performance based approaches.

Without a hybrid pickup drivetrain to build off of the way GM and Chrysler do, Ford has two choices for its truck strategy in 2017 and beyond: either keep costs as low as possible and hope it can undercomply with improved gas and diesel engines and improved aerodynamic efficiency and/or weight loss, or find a partner for hybrid technology and receive significant credits tied only to its use of hybrid technology rather than its actual efficiency. If that’s not a no-brainer, I don’t know what is.

But what does Toyota get out of the deal? Though it’s the clear leader in hybrid technology, its drivetrains have all been been based on transverse engines and front-wheel drive. Toyota’s expertise in full-sized, American-market trucks pales in comparison to Fords, and at this point it could even be said that Ford has the head-start on hybrid pickups, having begun joint development (with CCEFP and Folsom Technologies) on a hydraulic hybrid F-150. Autopacific analyst Dave Sullivan has another take, writing at vehiclevoice.com that

Based on the press conference today, it pretty much sounds like Toyota has a RWD hybrid system in development but they need Ford’s sales volume to make it work from a cost perspective.

Whether Toyota or Ford started development first almost doesn’t matter (the press release says “both companies have been working independently on their own future-generation rear-wheel drive hybrid systems”). For Ford, a hybrid pickup drivetrain is must-have technology, due to the CAFE loopholes. For Toyota, which is less dependent on full-sizers, the need isn’t quite as dire (as CAFE offers plenty of credit opportunities for plug-in cars), but Sullivan is absolutely right that having Ford as a partner will lower costs dramatically. All in all, the deal seems to be a win-win… if only because of the way future CAFE standards were written.

Portland’s 82nd Avenue is one of those streets that exists in nearly every American city. Unofficially demarcating Portland proper (“the right side of the tracks”) from the extensive working-class suburbs that bleed into Gresham (“the wrong side of the tracks”), “Shady-Second” is home to a vast strip of wall-to-wall buy-here-pay-here lots, used-car hustlers, and small repair shops that line both sides of the road from Sandy Boulevard all the way down to Division. Like every other used-car strip in every other town in America, it’s where folks go when they need a car and don’t have much money to spend. Unlike most other low-cost car Meccas, however, 82nd Avenue is also home to Oregon’s last remaining Saab dealership. And it’s something of a symbol of the hell that Saab dealers are going through right now.

Though I drive past it with some regularity (I live closer to “the tracks” than it’s fashionable to admit), today marked the first time I ever visited Garry Small Saab. Not because I haven’t been intrigued by the struggles of the few remaining Saab dealers, mind you, but because it’s hard to get any blogger out from behind his computer to chase a story. But when Automotive News [sub] quoted Mr Small in a piece today entitled Steady drip of bad news wears on Saab dealers, I knew I had to stop by. Though I’m extremely pessimistic about Saab’s chances of survival, and I’ve been highly critical of Victor Muller’s leadership, I feel nothing but sympathy for the dealers who are left to carry on the ground war. Anyone left in the Saab game after two years of a living PR nightmare has my complete sympathy and respect.

It’s certainly not hard to feel for Mr Small’s dilemma. Having bit his tongue around the media (to the best of my knowledge) for the last several years, Mr Small’s quote to AN [sub] betrays no sign of bitterness or anger; the facts simply speak for themselves.

Garry Small, owner of Garry Small Saab in Portland, Ore., has sold 15 new Saabs this year — but none since June. He has 14 in stock at his Saab-exclusive store.

“Sales have been absolutely flat,” he said. “At this rate of sales, we’ve got a two-year supply, you might say.”

Like other Saab dealers, Small has boosted used-car volume and relies more heavily on service operations.

“There’s no problem with parts and service,” he said. “That’s what’s keeping the doors open.”

By the beginning of June of this year, AN [sub] calculated Saab’s average inventory at a 248 days (prompting us to wonder why Saab was so concerned about restarting production). Based on his current selling rate, however, that number appears to have nearly tripled for Mr Small, whose 14 in-stock new Saabs account for something like a 700-day supply. Small doesn’t appear to be angry or bitter about the experience: after all, he hasn’t had problems with service the way some other Saab dealers have, with one telling AN [sub] that he had to wait 187 days for a 9-7x replacement hood. And because Portland is the kind of city that bought quite a few Saabs before “the troubles” (but wasn’t far enough in love with the brand to inspire hordes of specialty shops ala Volvo, Mercedes and Subaru), there’s plenty of service business to keep things afloat. But when 14 cars makes up a two-year supply, that service business just won’t last forever.

When I showed up at Small Saab this morning, finding it nestled between a buy-here-pay-here lot featuring English and Spanish signage and a used RV business, I didn’t see 14 new Saabs. In fact my first impression was of the used cars out front, which included a few 9-3s, a 9-5 and a 9-7x, as well as a New Beetle, Acura RDX and other entry-premium used vehicles. But on the North side of the building, lined up in a row, were six brand-new Saabs, mostly 9-5s, waiting for buyers. Evidently Mr Small wants to keep his visible stock to a roughly one-year supply. Opposite the new Saabs, though, was a seemingly endless row of 9-3s of every variety, reflecting the morning sun. With several hundred-thousand dollars of used Saab stock on hand, I was suddenly very curious about the level of demand for the brand’s used models. And though Small mentioned that service was his major earner, the service drop-off point held only a 9-5 wagon and, curiously, a TR6 and MGB (which are apparently part of the dealership’s used-car inventory). If anything can keep a service bay open, it’s a pair of British sportscars… but was that really keeping Oregon’s last Saab dealer above water? [Ed: please note that this is what we in the business call a "rhetorical question"]

Sadly, Mr Small was not in to answer my questions. After handing the friendly desk attendant my card, I was treated to a long, quizzical look. “We’re actually a fairly good-sized blog,” I explain, “and I saw Mr Small quoted in Automotive News… is there any chance I could ask a few questions?” An eyebrow moved, barely perceptibly. “Oh I know who you are,” I was told. “We’ve read TTAC. Unfortunately, Mr Small won’t be in until tomorrow.”

I left a card, and encouraged my somewhat stand-offish liason to pass it along to Mr Small, explaining that I sympathized with his plight and simply wanted to give him a chance to tell the world the truth about what it’s been like to be a Saab dealer over the last several years. As I drove away, I knew there was a good chance he wouldn’t call back. After all, if you’ve hung onto a Saab franchise for this long, why give up now?

The answer to that question, it seems, can be found in Sweden. Last week, we heard one of Sweden’s largest Saab dealers lambast the company, telling the press

For me, it is important to be proud of the brands that we have in our halls. Saab does not deliver cars they promised, they do not pay wages to their employees, nor debts to their suppliers while the owners pick out big money. It does not feel right for a [my] car dealers.

And now SvD.se reports that another major Swedish dealer has removed the Saabs from his ten showrooms, explaining

We have taken a time out and removed the show cars. It is sad, but there is no reason to work with selling cars that no one knows if or when they can be delivered

And it’s not just Sweden anymore: the AN [sub] story that quoted Small noted that eight of Saab’s 204 US dealers have closed their new car franchises, and quotes another dealer as saying he wishes he could drop out of the Saab game:

“I’d like to sell my Saab franchise, but it has almost no value right now,” said the dealer, who asked not to be identified. “To go from a top 10 dealer to crickets in the showroom — it’s a sign.”

Finally, the alternative to switching to used cars or trying to pick up a new franchise is also clear: the Albany Times-Union reports that

Fred Carl’s New Salem Garage Inc. has filed for Chapter 7 liquidation in Albany bankruptcy court, listing $1.63 million in liabilities and $254,000 in assets.

The Colonie Saab dealership closed Aug. 12 after more than a half-century in business… The decline in sales is reflected in New Salem Garage’s own financial performance. Its sales fell from $6.2 million in 2009 to $2.7 million last year and just $1 million through early August of this year.

With debt collectors closing in on Saab and freezing at least one of its accounts, workers complaining that they’ve received no guarantee that their next paycheck will arrive on time, and dealers dropping like flies, there’s nothing to gloat about here. The long, messy, highly public collapse of Saab is nothing short of a tragedy. But for precisely this reason it can’t be ignored or whitewashed. Anyone interested in the car business needs to look closely at Saab’s example as a warning sign that this business is merciless, and no place for unfounded optimism. And I really do hope Mr Small decides to give me a call and share his perspective… after all, there’s no better way to learn from history than to hear from the guys manning the front lines.