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.

Rather than running commercials during the Super Bowl, General Motors is looking to try something more subversive – product placement within other brand’s TV spots during the big game.

Automotive News reports that GM marketing man Joel Ewanick was investigating the possibility of paying other advertisers to insert GM vehicles into their ads. But various contractual elements related to Super Bowl advertising may kill the idea in its nascent stages.

Super Bowl ads are apparently restricted via a form of non-compete clause. Ford and Chevrolet could not run ads in the same “pod” (i.e. commercial break), and GM’s plan would cause havoc with this arrangement. Having GM products inserted into another company’s ad, as well as commercials for GM’s own products would cause a logistical nightmare for the people who decide where and when ads are placed.

Furthermore, the plan would run afoul of a long-standing policy against buying a 30 second spot and then re-selling 5 or 10 second blocks of time. NBC, which broadcasts the game, would also have to approve any ads that feature the promotion of an unrelated brand. The article also mentions a “reward system” that would give small prizes to viewers who are able to spot product placements, though no details on this seemingly silly scheme were given.

As much as Super Bowl ads have become a part of pop culture, meriting their own examination, the undeniable fact remains that for many, the ads are a great way to grab another beer or, shall we say, recycle the liquids via the municipal sewage system.

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.

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.

There are days when I wish industry analysts and auto industry journalists should be required to carry maltreatment insurance. This is one of those days.  Bloomberg reports that “Volkswagen AG will probably become the world’s biggest carmaker this year, vaulting past Toyota Motor and General Motors on gains in emerging markets.” Pure and unadulterated nonsense.

Bloomberg bases this daring prediction “on the average of three analysts surveyed by Bloomberg.” The analysts and their detailed predictions remain unmentioned – which is probably better that way. The analysts see Volkswagen’s sales “rise 13 percent to 8.1 million vehicles this year. GM sales will gain about 8 percent to 7.55 million, while Toyota will drop 9 percent to 7.27 million.”

Excuse me? The totals are waaaaaaaay off.

The percentages jibe halfways. We predicted similar ones last August. Let’s assume, they are right. It doesn’t take a genius to get them straight. Volkswagen just reported 13.9 percent plus for the first 9 months. GM will announce its quarterly results in November, but 8 percent sound about right. Toyota had budgeted a shortfall of 6 percent for 2011, but just for the sake of argument, let’s assume the analysts are right with 9 percent less. Now for the hard part: Let’s do the math.

I don’t know what kind of a spreadsheet Bloomberg is using, but if you apply the predicted percentages to last year’s official numbers (as supplied by OICA), then GM can hardly gain 8 percent and end up at 7.55 million if they sold 8.48 million last year.

A rise of 13 percent won’t bring Volkswagen to 8.1 million, but to 8.29 million, a little bit less than a million behind the world’s largest carmaker, GM.

And just for the record, 9 percent down from 8.56 million won’t land Toyota  at 7.27 million, but at 7.79 million. Not that it matters ranking-wise.

Unless the sky falls (and it would have to fall quickly), the year will end as we predicted it back in June: GM #1, Volkswagen #2, Toyota #3. It also should end with Bloomberg in remedial math class.

The numerical nonsense has already been picked-up widely by likewise mathematically challenged news outlets. One of them is – to our great disappointment – the Financial Times, which usually has its act together.

Instead of rectifying the story, the FT added to the confusion by predicting combined Renault and Nissan sales numbers of 6.8 million. Wrong. Renault and Nissan never consolidated numbers in the past, and probably won’t consolidate in the future either. A usually well informed source told us that the consolidated number would be 8.15 million – if the Alliance would consolidate. This includes results from the joint venture with AutoVAZ, which must be taken in consideration when joint venture results of GM, Volkswagen, and Toyota are counted. This would put the Nissan/Renault Alliance in the #3 slot, but again, it won’t, because they don’t want to be counted as one.

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.

I like to tout myself as the youngest full-time auto writer in the industry, but sometimes it backfires – like when an Acura exec came up to me on my first press trip (at 19 years old) and warmly told a few assembled journalists and PR types that he hadn’t seen me since I was this big.

On the other hand, my youth gave me particular insight into two products that launched within the last month, and are aimed squarely at my demographic – the Hyundai Veloster and the Chevrolet Sonic. Both cars launched at the 2011 North American International Auto Show, though their reception couldn’t have been more different.

The Veloster was absolutely mobbed on the Hyundai stand, with the assembled press crawling all over the swoopy hatchback, while the Sonic was tucked away in the back of Chevrolet’s display, prematurely written off as “the replacement Aveo”. I admit complicity in both of these prejudicial acts. At the time, GM had the underwhelming Cruze, while Hyundai had not only kicked it to the curb with the 2011 Elantra, but also launched the Sonata Turbo, Sonata Hybrid and the Equus, as well as riding the success of the Genesis lineup.

I went on a couple Hyundai events in the run-up to the Veloster’s launch and talking with the engineers and PR people, I got the sense that they were on to something. A number of them have some kind of “enthusiast” background, and not in the sort of forum-posting perpetually single know-it-all sense. They ride sport bikes, take part in NASA HPDEs or race in Grand-Am (in the case of one engineer), and have had experience working on high profile sports cars (one chassis engineer is a veteran of Ford’s SVT group).

Hyundai put together a launch that insufferable marketing types would describe as “experiential” to give an insight into what the supposed Veloster customer would do with their time – events included a music festival, eating at food carts and tailgating at a college football game. Doing bong rips and playing Call of Duty was noticeably absent, likely for legal reasons.

I was able to see some good bands, attend my first college football tailgate (us godless, socialist Canadians don’t really have NCAA-style sports) and take trip to Portland’s famous Union Jack’s gentleman’s club, but things started to fall apart before we even got in the car. We were treated to the typical Hyundai presentation, boasting of their booming sales numbers, their competitive advantages over other vehicles and the various advanced technological features that the Veloster had to connect with music players, smart phones and even an XBOX.

The car turned out to be a bit of a dud to drive. My review is essentially a diplomatic explanation of its adequate nature as a road car that really doesn’t like to be driven hard. The biggest problem for the Veloster is that expectations were set too high, and to Hyundai’s credit, they were put in place by the media and auto enthusiasts who expected the next CR-X but got something more like a Scion tC.

The Sonic launch was the quickest I have ever gone from cynic to believer, and GM didn’t even have to ply me with a trip to Dubai or a supercharged Cadillac. Walking into the presentation area of the hotel, I saw the room (well, the parking garage) decked out in Chevrolet Sonic themed graffiti – the automotive equivalent of seeing your Dad trying to “Superman Dat Hoe” at a Bar Mitzvah. Chevrolet went on and on about “millennials”, the 18-29 demographic that the Sonic is aimed at, but somehow forgot the most crucial thing about this generation – we cannot stand any contrived attempts to pander to us via marketing. I wanted to wretch when one marketing flack, talking about the generational anxiety regarding our economic situation said that “They are navigating these tensions [and]…we feel there’s a very big supporting role for a brand to play.”

Even though that remark made me near-homicidal, the next thing that came out of his mouth was the best bit of wisdom I’ve heard in my too-brief career as an auto journalist. The same exec said that while millennials are 40% of the car buying population in America, that does not mean they will buy new cars. On the contrary, he said that most new cars do nothing for this demographic and a lot of them tend to buy used. The team responsible for this car did what no one else did, and saw the world for how things really are rather than trying to have it conform to whatever vision they dreamt up in a board room according to sales targets and management directives. Hyundai pegged the Veloster’s competition as the Honda CR-Z and Mini Clubman, two cars that the 18-29 demographic wouldn’t be caught dead in. Chevrolet knew that for the same $14,500-$18,000 that a Sonic costs, one can buy a used 330ci, G35, S2000 or something else with a lot more panache, performance and prestige than a Chevrolet econobox hatchback. The Sonic has to be really damn good to force people to shy away from something that will impress their friends.

And it is. I’ll say right off the bat that the interior isn’t great. I made some rude comments to a GM Design employee about how the hard plastic would be great for rolling blunts, and her retort was that Chevrolet decided to go right for hard plastic rather than try and make it look like faux leather or carbon fiber. I get that the car is built to a price. Fortunately the rest of it is on point. It looks pretty decent, the 1.4L Turbo and 6-speed gearbox do the job well – it’s about half a second quicker to 60 mph than the Veloster – the steering is excellent and the car’s handling limits are far beyond what’s reasonable to expect for a subcompact. Ford can hype up their Ken Block Rallycross nonsense as much as they want, but the Sonic is the real deal for the real world, a sort of poor man’s Mini Cooper S without the awful reliability.

I’ll save any meta-judgments about whether this is Hyundai’s first mis-step or whether Chevrolet is really back. Parking the Sonic outside a trendy lounge won’t get you past the velvet rope, but it’s a well-made, unpretentious product that is genuinely good and doesn’t cost too much money. Car companies spend exorbitant sums trying to promote their crappy wares via concert promotions, X-Games athlete endorsements or even launching entirely new brands. Meanwhile these contrived efforts are totally transparent to those they’re hoping to sell their cars to. Take those funds and just make a decent car that doesn’t suck and you’ll get the best kind of marketing in the world; one young person telling another “I just bought (insert vehicle here) and you know what? It’s a fucking great car.” Hopefully Chevrolet proves my theory right, or we’ll be seeing another Gymkhana video in a few months time.

Today, my phone rang repeatedly, and my email inbox quickly filled with questions. They all said: “Did you see this? Do you know these people?”

I knew the guy in the picture. I used to be married into a family that was in the Washington Green book. I lived in Virginia two driveways from Thomas Jefferson’s Monticello.  I was surrounded by gentleman farmers and politicos. Jeez, the late Ambassador Fritz Nolting drove into my pool on a riding mower with a cocktail in one hand and a cigar in the other. Talk about distracted driving.

The right man in the picture wanted to be Governor of Virginia. He still does. The left man wants to be a tycoon.

The man who leans over that sign somewhere in the godforsaken desert of Inner Mongolia, China, is Terence “Terry” McAuliffe. Yes, the very same Terry McAuliffe who was a Democratic National Committee head and a close Bill Clinton adviser who, according to a United States Senate document organized the famous coffees and sleepovers that saved Bill Clinton from electoral annihilation.

According to one source, “McAuliffe’s soft money strategy was responsible for President Clinton’s 1996 scandal concerning the Lincoln Bedroom sleepovers and the White House coffees, two tactics employed to solicit huge donations from wealthy friends and patrons of the Clintons.”

Putting the Lincoln Bedroom up for sale for $100,000 a night (on average) was only a minor scandal compared to what was called “Chinagate.”

Al Gore, friend and beneficiary of Buddhist monks, praised McAuliffe as ”the greatest fund-raiser in the history of the universe.” Coming from Gore, that’s the best endorsement one can get.

Yes, you are looking at THAT Terry McAuliffe.

Yes, it’s the same and he is back in China, and back in the fundraising business. This time, he promises to bring 300,000 cars to China. Made in America by Americans. Assembled in China. In that new factory which is going up behind the two gentlemen.

Wait, there is more. A lot more.

The company that will perform the economic miracle is GreenTech. The man to the left of McAuliffe is Charles Wang. Ring a bell?

Remember this story? Remember how Ed Niedermeyer wrote:

“Greentech Automotive is the hybrid vehicle firm founded by the former CEO of Brilliance with plans to build a plant in Mississippi with funds raised through the EB-5 visa program. Not to be confused with Hybrid Kinetic Motors, the hybrid vehicle firm founded by the former Chairman of Brilliance with plans to build a plant in Alabama with funds raised through the EB-5 visa program.”

Yes, one and the same.

This will get a bit complicated, so bear with me. Let me introduce you to a few people. You know, in China, connections are everything.

Meet Yang Rong, identified by Automotive News [sub] as “the ousted former CEO of Brilliance China Automotive Holdings Ltd., BMW AG’s partner in China.” Automotive News tells this story:

“In the early 1990s, Yang was one of the first entrepreneurs to strike it rich in China’s auto industry. He was hailed in China as part of a new generation of savvy businessmen and credited with catapulting Brilliance from making dreary buses into BMW’s partner in making BMW 3- and 5-series cars.”

“But in 2002, after feuding with a Chinese provincial governor over the location of a new factory, Yang found himself charged with unspecified economic crimes. He fled the country under a false passport for Los Angeles, where he joined his wife and four children. Most of his own personal wealth had to be abandoned in China.”

Automotive News missed the good part. The dispute was about more than a location of a plant. It was about who owns what of Brilliance, a company that became the first Chinese corporation listed at the NYSE after 50 years.  According to this account in the China Auto Review,  Yang “was forced out as chairman of Brilliance China and served a warrant for allegedly committing “economic crimes of embezzlement of state assets” in late 2002.” Here is one of the many lengthy court documents, in case you have the time.

To make it short, China would love to have Yang back, but he’s not coming.

Yang went on to found the Hybrid Kinetic Motors company, which we had chronicled in 2009 under the Farago regime. Hybrid Kinetic Motors promised to bring a huge car industry to the American equivalent to Inner Mongolia, a place called Northern Mississippi. Rong had explained to Automotive News [sub] that the plan was to “build a $6.5 billion auto plant in northern Mississippi, where he would hire 25,000 workers to eventually produce 1 million cars a year.” It will happen real soon now.

Then, there is another man. His name is Xiaolin Wang. According to a puff-piece in Wikipedia, written by an editor by the name of Beijingren (= Beijing Man) who had written nothing else than this article and had then vanished from Wikipedia, “Charles Xiaolin Wang is an experienced business entrepreneur, financier, and lawyer with an extensive background in capital markets financing and international business transactions. He currently serves as the President and Chief Executive Officer at GreenTech Automotive.” In the top picture, he is the man to the left of the greatest fund-raiser in the history of the universe, Terry McAuliffe.

Xiaolin Wang was Rong’s lawyer and business partner at Hybrid Kinetic. Yang Rong, no stranger to feuds, started a new feud with his lawyer. Says Automotive News:

“Yang’s project split in two after a falling out between him and the man he had appointed to manage it: his former attorney and Chinese entrepreneur Xiaolin Wang.”

“Yang — listed in court documents as Benjamin Yeung, the name he uses in the United States — sued Xiaolin Wang and three other project managers. Yang alleges that the other managers had been steering control of the venture away from Yang and had begun operating under a different but similar name.”

“Yang’s venture is called Hybrid Kinetic Automotive Holdings Ltd. Xiaolin Wang and the others had been operating as Hybrid Kinetic Automotive Corp.”

An out-of-court settlement had Xiaolin Wang change the name of his company. It was known as GreenTree Automotive, and was either later renamed to GreenTech, or Bill Brabec, the Jackson, Miss. attorney for Xiaolin Wang, had the name wrong. Or who knows.

Hybrid Kinetic, run by Yang or Yeung, and GreenTech, run by Xiaolin “Charles” Wang, went forth and operated in parallel.

Both attracted investors via the EB-5 visa program, a scheme which the Center for Immigration Studies along with many others call either “a scam” or “investor fraud.”

Allegedly, if someone invests $500,000 in an underprivileged part of America, green cards for the “investor” and the immediate family beckon. There are a lot of Chinese who paid much more to enter the U.S. illegally, so that’s considered a great deal. Some killjoys claim the investment must be “active” and the investor must be involved in managing the company. Minor detail.

Hybrid Kinetic (which sometimes calls itself “HK Motors” – something that in China can be easily confused with “Hong Kong Motors”), was incorporated in Delaware, is headquartered at Pasadena, California, and wants to open a plant in Baldwin County, Alabama. Governor Bill Riley confirmed to HK Motors that “HK Motors could apply for and receive all statutory incentives based on the company’s proposed $1.5 billion investment.” On HK Motor’s website it says that letter “officially confirmed that approximately $1 billion in incentives is available to HK Motors.” Edmund’s said:

“Pouring millions of state funds into an untried automaker headed by an entrepreneur with a question mark hanging over his head (he says he’s done nothing wrong, that the charges against him in China are politically motivated) is something that’s ought to require a heck of a lot of due diligence on the part of state officials.”

The fine State of Alamaba apparently does not subscribe to Edmunds or its ideas.

GreenTech Automotive (GTA)  “was founded in 2006 by accomplished entrepreneurs Terry McAuliffe and Charles Wang,” says its website.

Wang is CEO, McAuliffe is Chairman. According to some accounts, Xiaolin “Charles” Wang was still with Yang Rong a.k.a. Benjamin Yeung when Greentech was founded in 2006. According to the puff-piece Wikipedia article, the founding happened 2008,  and Hybrid Kinetic did never exist in Wang’s illustrious career.

And what about government money? In 2009, the Memphis Daily News said “because Wang and his team are seeking much of their capital in China, the financial particulars are murky at best. What confounds this project is the silence from local and state officials.” Last year, the same paper heard that Mississippi governor “Barbour was noticeably absent as Charles Wang talked of building 150,000 hybrid cars a year in a plan that is still awaiting financing.”

It’s not that Wang and McAuliffe don’t have any friends formerly in high places. Wang told the Memphis Daily News:

“Former President Bill Clinton also has been active in the project, traveling to Hong Kong and introducing company representatives to heads of state at his recent global initiative.”

He just doesn’t have any money to invest.

Still with me?  Amazing. TTAC loyalty knows no bounds.

Now we move on the really brilliant part: Xiaolin “Charles” Wang had wisely disassociated himself from Yang Rong a.k.a. Benjamin Yeung. The latter Yang Rong will never ever return to China, where he has been ronged. The former Wang however proudly appeared in Ordos, Inner Mongolia, otherwise famous for China’s Modern Ghost Town , where a city planned for a million stands empty. This will most likely change immediately with the arrival of Terry McAuliffe.

“Mr. McAuliffe fills a room” said the Washington Post. That’s an understatement. At the notorious May 2000 Clinton fundraiser, he filled the former MCI sports center in Washington, DC. $26.5 million were raised in three hours for the Democratic National Committee. As the New York Times remembers, “the donors, from those in black tie to those in blue jeans, were beckoned by the Midas of fund-raisers, Terry McAuliffe, who, in the end, squeezed 13,625 people into a space designed for 12,000.” Roomfilling above plan!

If McAuliffe can fill a stadium with people who want to be separated from their money, then producing “a full line of vehicles powered by U.S.-made high-efficiency combustion engines, hybrid powertrains and pure electrical drivetrain” in the middle of nowhere will be a cinch. As Greentech’s press release says:

“The product line will include subcompact, compact, midsize and sports vehicles, all to be designed specifically for and sold exclusively in China. Full production capacity will be 300,000 vehicles per year and the core components of these vehicles will be made at GTA factories in the United States.”

“And because our core components will be made in America, we will create 2,000 new American jobs when we reach full production capacity,” said McAuliffe.

The joint venture is called Ordos GreenTech Automotive Co., Ltd., and is a partnership between GTA and Shengyang ZhongRui Investment Co., Ltd., a Chinese investment holding company.

License from the Chinese government? Not mentioned. Does anyone need a license here to make cars? Feasibility study? Minor details for a McAuliffe. A few phone-calls, possibly from Bill’s wife, done.

Remember: When The Washington Post called him a “huckster,” McAuliffe corrected it to “hustler.”

Not only that, McAuliffe is an experienced investor. In the 1990s, McAuliffe invested $100,000 in a company later called Global Crossing. When the company went public seventeen months later, the stock’s value rose quickly and McAuliffe’s initial $100,000 investment was valued at nearly $18 million. Global Crossing filed for bankruptcy in 2002, after McAuliffe had smartly sold his stock.

With a man like this, could anything go wrong? Ordos will become China’s new Detroit. Gee, it already looks as deserted as Detroit. Liu Shufu of Geely will slap himself for paying $1.5 billion to get the 300,000 car Volvo. With a McAuliffe, he could have had the same for a few cups of coffee.

Mark Modica, a former Saturn dealer GM bondholder, has leveraged his financial loss at the hands of the government bailout into a blogging position at the National Legal and Policy Center, a conservative nonprofit that “promotes ethics in public life through research, investigation, education and legal action.” At the NLPC, Modica focuses on what he believes to be corruption surrounding the auto bailout, and has written a series of anti-GM posts that make TTAC look like a Detroit hometown newspaper (TTAC “bias police,” take note). Most recently, Modica has caught the attention of the auto media, including Automobile Magazine and Jalopnik, with a series of posts accusing Chevy dealers of “scamming” taxpayers by claiming the Volt’s $7,500 tax credit and then selling Volts as used cars. TTAC welcomes anyone seeking to cast more light on the bailout, but unfortunately, Modica’s attacks are too focused on making GM look bad and not focused enough on providing relevant information to the American people. Let’s take a look and see why…

In the piece that set off the current flap, Modica wrote

I recently set out to determine how honest General Motors is being when it claims that demand for the Chevy Volt is exceeding supply. It was not hard to discover that this is not the case as retail sales remain dismal. A web search on vehicle locator sites such as Autotrader and Cars.com exhibit sufficient supply of the Volt, one dealership within 70 miles of my location had six new Volts available for sale.

Even Ebay lists vehicles, many had no bids and one listing in Texas hadn’t even met reserve with only one day of bidding time remaining. But I discovered something far more disturbing during my search. Many Volts with practically no miles on them are being sold as “used” vehicles, enabling the dealerships to benefit from the $7,500 credit supplied by the American taxpayers on each car. The process of titling the Volts technically makes the dealerships the first owners of the vehicles, which gives them the ability to claim the subsidies.  The cars are then offered to retail customers as “used” vehicles.

The practice of dealerships purchasing from one another is not uncommon. “Dealer trades” are done all the time in the industry. What is very unusual is for the receiving dealership to be able to maximize profits at the expense of taxpayers by claiming tax credits of $7,500. It is also very rare for dealerships to part with any model that has higher demand than supply, as GM claims is the case with the Volt. In addition to qualifying dealerships for a $7,500 tax subsidy, the titling process also allows GM to record Volt sales even if the cars are sitting on dealership lots.

Modica’s attack is hamstrung from the start because his goal is to demonstrate that supply of the Volt exceeds demand. The simple truth is that the government’s tax credit, in combination with strong early-adopter demand and low production volumes, basically guarantees that Volt demand will outstrip demand in the short term. If Modica wants to prove that the market won’t support the Volt’s high price and complexity, he’s going to have to wait until production ramps up and the early adopters have satiated their “gotta have it” instincts.

Because he doesn’t appear to have the patience to watch the Volt fail on its own terms (which, it must be added, is not a foregone conclusion, depending on how GM handles production), Modica has to look twice as hard for potentially damning evidence. Since the availability of used Volts alone doesn’t say much about the supply-demand balance, Modica manufactures another “scandal”: that Chevy dealers are taking the $7,500 tax credit that the government intends for consumers, and then selling Volts as used cars with no tax credit.

This “scandal” quickly falls apart under the weight of its over-ambitious pretensions: after all, if demand for Volts is as weak as Modica wants to believe, surely absorbing the tax credit at the dealer level is a recipe for Volts languishing on dealer lots. Since Modica offers no evidence for high dealer inventory, his major thrust (proving that demand for the Volt is weak) falls apart. Furthermore, without a single case of a dealership claiming the tax credit and then selling a Volt to a customer under the pretense that it still qualifies for the tax credit, his research ends up well short of proving a “scandal.” As a result, Modica is left having to argue against dealers taking the credit on principle.

And here’s the tragedy: Modica is so focused on landing a political-economic “scandal,” he ignores the legitimate criticisms of both GM’s Volt-dealer policies and the government’s tax credit. Had he been less interested in the political side of things, Modica would have noted that GM’s hands-off approach to Volt dealers has led to dealers gouging early adopters. Sure, that storyline would have proven that short-term demand for the Volt was strong, but then Modica could have pointed to the contrasting situation at Nissan, where Leaf sales are pre-arranged online, cutting dealer markups out of the loop. This strategy also keeps Nissan dealers from taking the tax credit (at least in theory), and will prevent any “gouging fatigue” that could hurt Volt demand down the road.

From the other side of this issue, if Modica had been more interested in the politics of plug-in tax credits, he would have realized that manufacturing a poorly-proven “scam” was wholly unnecessary. As TTAC reported back in February, taxpayers have already lost some $7m worth of plug-in tax credits to fraud. In short, the Treasury Inspector General for Tax Administration has already proven that $33m of tax credits were claimed erroneously by everyone from prisoners to IRS employees ($7m of which is unrecoverable), offering Modica a well-documented scandal that has been undercovered in the mainstream media.

When industry and politics collide, the public deserves strong, independent information gathering and analysis to protect against inevitable abuses. But those who wish to take up that mantle have a responsibility to own up to their motivations: are they looking for legitimate issues regardless of their political or economic consequences, or do they set out with predetermined conclusions and gather up just enough information to support them? Unfortunately, Modica’s history and recent work seem to place him in the former category. Exploring the interaction between the US Government and the auto industry that it now interacts with more than ever, requires the ability to spot scandals without having to manufacture them. And the more you cover the inevitably tortured relationship between private business and public government, the more you realize that there are very few big scandals anyway… after all, free markets and fair governments almost always die the death of a thousand cuts rather than being taken down by a cartoonish scandal.

While the political battle lines over increasing CAFE standards are being drawn in Washington, with the industry taking on both environmentalists and itself, a line of analysis that’s been around since 2009 is exacerbating the industry’s internal divisions over the impact of CAFE increases. A two-year-old University of Michigan study has been exhumed and expanded upon in a new CitiGroup report which makes a bold claim: CAFE will actually improve both sales and profits for the industry. And with Detroit taking the lead in resisting CAFE increases, one might think that the industry’s “turncoats” like Toyota and Hyundai, who have made marketing-led decisions to support CAFE increases, would be the main beneficiaries of these reports. Not so. According to this battle-line-confounding analysis, the biggest beneficiary of CAFE increases will be… Detroit. Madness you say? You may well be right…

We’ve reported on the work of the UM’s Transportation Research Institute a few times before here at TTAC, most notably the 2009 McManus/Kleinbaum study Fixing Detroit: How Far, How Fast, How Fuel Efficient [PDF here]. That study raised our eyebrows on several occasions, forwarding as it did the counter-intuitive conclusion that Detroit would be a major beneficiary of increased CAFE standards or, as the study puts it “increasing fuel economy standards encourages automakers to create a portfolio of products that is more likely to raise the profits of the Detroit 3 automakers than to lower them”). The study noted:

Our finding that Detroit 3 automakers’ profits would increase under higher fuel economy standards is very robust.  We assessed the sensitivity of our prediction of Detroit 3 automakers’ profits to extreme values of 11 uncertain factors we predict for our model, and found that just three of the factors had extreme values capable of generating a drop in Detroit 3 profits:  an extremely low consumer response to fuel costs relative to vehicle prices (less than one-fourth Sawhill’s (2008) statistically estimated median value), a gasoline price of $1.50 per gallon (an extremely low price not seen since 1999), or direct manufacturing costs (materials and labor) that are 2.2 times the estimates we used (Meszler) and 3 to 4 times the National Research Council (2002) estimates (adjusted for inflation).  While the three factors could result in losses rather than gains in profits, the likelihood of lost profits is low.  There is a 7% chance that profits would be less than zero if CAFE were increased 30% (35 MPG), a 15% chance of a loss if it were 50% (40.4 MPG).

As intuition would suggest, the larger mandate increases the downside risk.  But it also offers greater upside opportunity, as the chance that increased profits could exceed $6 billion is 18% for a 50% increase in fuel economy, but only 6% for a 30% increase.  The total uncertainty attached to the larger increase is greater, which means both more upside and more downside.  Overall, the risk and reward profile of these scenarios is very positive, with only a small chance of losing and a very large probability of gain.

That 2009 finding was, however, put in the context of a domestic auto industry in the midst of crisis and restructuring, and as a result it focuses largely on fuel economy as a factor in a larger turnaround. At the time, GM was still emerging from the wreckage of the SUV/pickup market, still suffering from the kind of self-defeating thinking that McManus and Kleinbaum document:

For example, GM conducted internal research for decades that found customers value fuel economy far more than the company’s financial calculations assumed.  As publicly reported, the company systematically discounted these research results when calculating the benefits of improving fuel economy, often by as much as two-thirds.  In other words, if the research said the sales gain would be 10%, the number used to do financial calculations was 3%.  In fact, the belief that fuel economy was not “worth it” became so ingrained into the culture of the company, and so institutionalized in decision making that the senior people might not even be aware that they have been ignoring their own research.

That example, combined with consumer feedback confirming that lack of fuel economy was keeping them from buying American-brand autos is the fundamental basis for the study’s assumption that significant fuel economy improvements are relatively low-hanging fruit. Or, to borrow a slide from the report:

This argument is quite like the one forwarded by the Union of Concerned Scientists recently, which holds that payback in lowered fuel bills will make consumers more likely to spend more for increased fuel economy. Whether that’s entirely true or not isn’t yet clear, although early sales of Ford’s EcoBoost F-150 seems to indicate that it’s possible. Still, whether paying more upfront for longer-term savings (essentially a front-loading of lifetime costs) will prove attractive to the mass market remains very much to be seen (and the study assumes “consumers respond the same to fuel cost as to retail price”). Moreover, the McManus/Kleinbaum study depends on a return to the previously “normal” sales levels of over 15m annual sales by 2016 and over 17m units by 2020, levels which have not proven to be sustainable over the long term without dangerous levels of subprime credit lending.

Which leads us to a Citigroup/Ceres report based on the McManus/Kleinbaum study, which looks to the 2020 period and beyond for further evidence of the UM team’s basic conclusion. That report uses the same GM price elasticity and cross-price elasticity model that the 2009 report relied upon, and assumes the same $4/gal gas price average for its baseline scenario (itself a questionable assumption, given that gas prices have already risen to $4/gal). Though the Ceres report goes into more detail about the market penetration and cost increases of different fuel-efficient drivetrains, the conclusion remains the same as it was in 2009, namely that

Under the simulation, the Detroit 3 gain relative to the industry due to a number of factors, including 1) Narrowing the historical gap between Detroit 3 fuel economy and competitors; and 2) Light trucks and larger cars, in which the Detroit 3 sport a greater share, have greater potential to add consumer value through fuel economy than do smaller cars and car-based trucks. This is because future fuel economy increases have a greater impact on the fuel economy of these larger vehicles, thereby providing more utility to the consumer, and since full-sized trucks tend to be used for commercial purposes, this is a key factor in the purchase decision. Finally, the prices–and therefore the estimated variable profits– are higher for trucks and large cars.

The question that doesn’t appear to factor into the analysis anywhere: can we really rely on trucks to maintain their volume levels in the face of steadily increasing gas prices? Just as McManus and Kleinbaum question whether fuel economy is optimized in the baseline scenario (in turn leading to the low-hanging fruit for Detroit), I would question whether or not truck demand is “optimized” in the 2020 pre-CAFE senario outlined above. After all, the last time Ford’s full-sized truck sales hit the 670,000 unit level was 2007. In order to gain the unique benefits projected in this series of reports, that volume can not continue to decline as it did in 2008-2009 or settle to just over a half-million units as it did last year. Meanwhile, with the overall truck market settling into a 30-year low, that volume (and the low-hanging-fruit profits that underpin the CAFE-is-good-for-Detroit thesis) can hardly be relied upon.

In short, this line of analysis is truly puzzling. If, as it appears, the 2009 report was intended as a justification for the bailout, the Ceres/Citigroup revisit of the theme is puzzling. After all, the thesis that Detroit stands to gain the most form CAFE increases runs directly counter to the lobbying message coming out of Detroit’s governmental affairs offices as well as the Alliance of Automotive Manufacturers. On the other hand, even accounting for the flawed assumptions of $4/gal gas, strong truck sales and the consumer’s willingness to front-load costs (something the American consumer is famously allergic to), the study still sends Detroit in the right direction. Though I wouldn’t rush to assume that CAFE increases (or even higher fuel prices) will spur marginal profitability or volume gains for the Detroit automakers, steadily rising gas prices will have more of an impact on the market than CAFE. Whether profits improve or not, Detroit has little choice but to correct for its decades of anti-fuel-economy planning as the market changes. And, as Detroit has learned all to well in recent years, profits are nice but survival is the bottom line. Survival, not a groundswell of business success, is what should be motivating the Detroit automakers to stop worrying and learn to love (or at least accept) CAFE increases.

The combined market share of GM and Ford will reach 40% of the US market by the end of 2015. Yes, you just read that correctly. That’s a full five percent more share than what they have today, or a gain of just one percent a year. Call me crazy… but recall that Farago and I called the GM bankruptcy way before most industry observers (and certainly before the BoD of Old GM) could see it coming. Long time TTAC readers will also remember my call to buy Ford’s stock in April 2009 when it was trading in the three buck range. So calm those gut-reactions for a few minutes and let’s walk through this.

We should begin by reviewing a few facts (while forgetting the fact that GM once owned 50% of the market among its six brands a long time ago): GM and Ford today are selling into approximately 35% of the market. In a normalized market (and that’s probably just two years away), the average SAAR will likely run in the 15+ million unit range. Each one percent of market share represents 150,000 units. Doing simple math, for GM and Ford to grow market share by five percent means that these two Detroit companies will need to gain additional sales of 750,000 units beyond what comes to them from market growth alone. Holy cow…that’s a gigantic increase – basically three full production plants worth of sales.

Will it be difficult to do? I don’t think so…other than the fact both companies are starting to run out of production capacity. GM North America production – in Q1/2011 – was running at 99% capacity on a two-shift basis. But GM does have some idled plants – like Spring Hill, TN – that it can restart. Ford is getting squeezed too but Ford hasn’t disclosed its capacity utilization and is actually closing some plants while retooling others. But let’s just believe for now that both companies will solve their capacity problems. (And why no comment from GM and Ford about new capacity for now? It’s being held as a bargaining chip with the UAW – more jobs in the USA means more UAW members but only if the UAW plays ball this summer during contract negotiations. Otherwise, bienvenidos a Mexico!)

So what is it going to take? It’s not the product any more (with a few exceptions). Rather, all GM and Ford need is greater consideration from consumers and increased penetration in the fleet market.

Fleet is the easiest to understand as it comprises daily rent cars, commercial accounts, and governments. For GM and Ford, fleet sales represent approximately 30% of their sales and in the overall industry fleet sales represent nearly one in five new vehicles sold.

For a fact check here, total new fleet registrations in CY2007 according to R.L.Polk were 3.0 million units but dropped to 1.8 million units by CY2009. While 2010 data is not yet available, fleet sales in 2010 likely rebounded from 2009 but were hardly at the level of 2007 or in years prior. Clearly, there’s room for growth in fleet sales ahead – and it’s doubtful GM and Ford will walk away from their 55% share of the fleet business. And we know now that the Japanese are going to have plenty of problems this year and maybe next year too building vehicles so it’s an opportunity to take business. (And the Koreans can only supply so much…)

So for arguments sake, let’s assume that the fleet business is going to reach a normalized level of 2.8 million units annually (19% of total sales of 15MM units). GM and Ford, without any share increase, would sell 1.5 million units to fleets. But allocating another five percent share increase to these two Detroit companies with their improved passenger car line-ups and with the problems facing the Japanese, there’s an additional 140,000 vehicles to be sold from share gains to fleet buyers.

So to meet my forecast of an increase of 750,000 units for GM and Ford in share growth, and with 140,000 units coming from fleet sales share increases, it means that 610,000 units will come from the retail side. Of course, all of the gains are business taken from competitors. And here’s the heart of the argument – Toyota and Honda are going to get clobbered in the marketplace. It’s all about product and reputation – and for as long as I can remember, neither GM nor Ford had competitive small or mid-size cars (or luxury cars too) worth a damn. Plus Detroit’s reputation for build quality, reliability, or even design wasn’t setting consumers’ hearts aglow. The Japanese captured these consumers, particularly along the coasts, and took share from Detroit.

But the tide is going out on the Japanese. Like Detroit pre-bankruptcy, the two Japanese stalwart manufacturers have gotten complacent. Long model cycle times, boring design, and replacement products (when they get here) that look like warmed over versions of the previous generation vehicles. (Nissan is somewhat of an exception to this.) The luxury brands for Toyota and Honda also appear stalled for the same reasons as their mass market siblings. Plus, the Japanese no longer offer superior fuel economy to the latest offerings from Detroit.

Detroit now just needs to convince those American consumers that won’t consider a Detroit product that it’s time to take another look. You can’t sell a Detroit product to a buyer that doesn’t put a domestic product on the shopping list. And here’s my idea of how Ford and GM can accomplish that – put a human face from within their respective companies (like a vehicle designer, an engineer, a factory worker, and a believable senior executive) to come out and ask for consideration in a series of TV spots. No pitchmen, no fancy graphics, just the speaker, the product, and the brand logo. Focus on some attribute of the product that makes it worthy of consideration. Then add the spokesperson’s contribution to making it a great product. No need to dismiss the competition. All that is being asked for is to take a look.

To add five full percentage points to market share in a short time period is a herculean task – but the only thing that prevents GM and Ford from doing so is no longer due to the products but this lack of consideration. Ask your friends, colleagues, family members, or anyone else who now drives a foreign brand product if they’d consider a domestic product for their next car purchase. I’d bet most would say something along the lines that “been there, tried that, had a horrible experience – won’t go back.” And that’s the biggest obstacle for GM and Ford today.

I believe that with the new product onslaught from GM and Ford, some focused advertising that asks for consideration and with growing positive word of mouth from satisfied customers, the sales needle will move in short order. The world is their oyster – as long as they stay focused on product at the RenCen and in Dearborn.

For years now the Chinese automakers have been the bête noir of the global car industry, inspiring equal parts fear and contempt in boardrooms and editorial meetings from Detroit to Stuttgart. In an industry built on scale, China’s huge population and rapid growth can not be ignored as one scans the horizon for dark horse competitors. And yet no Chinese automaker has yet been able to get even a firm toehold in the market China recently passed as the world’s largest: the United States.

Certainly many have tried, as the last decade is littered with companies who have tried to import Chinese vehicles, only to go out of business or radically rethink their strategy (think Zap for the former and Miles/CODA for the latter). Others, like BYD (or India’s Mahindra), have teased America endlessly with big promises of low costs and high efficiency, only to delay launch dates endlessly. In short, a huge gulf has emerged between overblown fears of developing world (particularly Chinese) auto imports and the ability of Chinese automakers to actually deliver anything. No wonder then, that we found what appears to be the first legitimate attempt at importing Chinese cars to the US quite by accident…

The internet is an amazing thing: on any given day you literally never know what you’re going to find. Typically when I find a story that shows promise as a TTAC post, I open a few tabs in a new window and search for words and phrases associated with that story in hopes of finding related reporting and greater context. And sometimes those searches lead to a story that’s infinitely more interesting than the original idea that lead to them.

A few days ago, for example, an Automotive News [sub] story about Wheego Electric Cars Inc caught my eye. The firm, which imports Shuanghuan Noble gliders and converts them to electric power using US suppliers, sold its first retail vehicle last Earth Day (April 22), but AN [sub]‘s piece was hardly the puff piece you might expect from such an opportunity. Instead, the industry paper reported that Wheego was out of money and had retained a VC outfit to raise cash, even quoting CEO Mike McQuary as saying

My constraint is primarily capital. We’ll be living hand-to-mouth as we try to get the first cars built. The next 200 will creep out as we raise money.

It’s the kind of story that appeals to TTAC’s occasionally vulture-like editorial instincts, as I know that more than a few of TTAC’s readers would probably get a schadenfreude-laden chuckle out of the struggles of a firm trying to sell an electrified Chinese Smart Car clone for “$33,995, including shipping” (before $7,500 federal tax credit). But after a little bit of digging through the search results for “Shuanghuan” (looking for mmore background on this Hebei Province-based automaker) I came across a website that I hadn’t expected to find: www.shuanghuanofdesmoines.com. Never having seen anything resembling a Chinese-branded dealership in the US, I clicked over.

There, I found a website titled “Shuanghuan Auto,” advertising two versions of the Noble and the SCEO (neé CEO) SUV… with an Iowa address. A glance at TTAC’s archives showed one incredulous write up from Bertel two years ago, and little else to explain this unexpected find. The Noble G4 was advertised as having gasoline (1.1 liter Suzuki design, made in China) or electric options. The SCEO was shown with a 2.4 liter Mitsubishi engine or a 2.5 liter “Yuchai” turbodiesel. I briefly checked the EPA website and, finding no signs of “Shuanghuan” or “Yuchai,” I dialed the number on the website and a day later I spoke with the owner of Shuanghuan Auto Des Moines.

Gene Gabus lives up to the finest Iowan standards of friendliness, instantly warming my expectation-free cold call with immediate candor. “I don’t know if you realize this,” he says, “but it takes a ton of work to get these cars up to American market standards.” As it so happens I had heard that it was tough to import cars to the US, and soon Gabus is explaining the extensive re-working that was needed to bring the Noble’s fuel system and rear-crashworthiness up to snuff. “We’re just working on the advanced airbag system now,” he says. Having seen a Noble crash test and been impressed by everything but the fact that there didn’t appear to be any airbag, this sounded promising. He describes extensive fuel tank modifications and says that dual-fuel figured heavily into US market plans. “You’ve heard of CNG cars?” he asks. I had. This was becoming even more interesting.

“Why have I barely heard of you guys?” I ask. “We’re used to hearing a lot of hype from importers of brands like Mahindra and BYD.” “Well,” he answers, “the feds don’t like a lot of talk before they approve a vehicle. Besides, we’ve watched the other guys talk a big game and fail to deliver. We want to avoid that.”

“And you are a former Chrysler dealer?” I ask. The address had been listed as Des Moines Chrysler on Google Maps. “Did you lose the franchise during the bailout?” There’s a brief pause. “I was robbed,” he growls. His profitable dealership had lost its franchise, while a pair of smaller local competitors had kept theirs. It’s clear that the wounds are still fresh, but they haven’t stopped Gabus from diving into a full-on attempt to homologate Chinese cars for the US. I press him with more questions. “Look,” he says, “let me give you Bob Smith’s number. He’ll be able to answer all of your questions.”

Sure enough, Mr Smith answers my first phone call, and in short order is answering my questions in a warm, Southern drawl. “I’ve done business in China since 1985,” he explains. “Computers, wheelchairs, that kind of thing.” And why cars? “I’ve seen how China is growing,” he explains. “I’ve seen their demand for gasoline grow and grow. Supply won’t keep up with their growing demand, and we’ve seen what happens when gas prices approach $5/gallon. People begin to seek out alternatives.”

Smith and Gabus plan on selling gasoline and electric-powered versions of the Noble, but the centerpiece of their plan involves dual-fuel version, which run on gasoline or Compressed Natural Gas (CNG). Like many people who have spent a lot of time around the car industry, Smith and Gabus are skeptical about all the hype surrounding electric vehicles, and given that most importers of Chinese vehicles focus on electric conversions, this puts them in a unique position relative to their competition. Smith waxes enthusiastic about the low prices and high supplies of natural gas in the US, and says the key to his business case is the relatively low cost of natural gas conversions.

“Look,” he says, “batteries often cost as much or more than the car itself.” The struggles at Wheego, which has split homologation costs with Smith and Gabus’s Shuanghuan importation outfit (Smith calls Wheego “good guys”), fill in all the necessary details. An electric Smart clone might appeal to hard-core greenies, but at $33k, their chances of mass-market acceptance are slim. Like Wheego, Smith is banking on help from the federal government in order to break into the market, but unlike the EV hawkers, his natural gas focus helps avoid the trap of having to sell a low-cost car at high prices.

“We expect the Pickens Plan to pass this summer,” explains Smith, referencing the natural gas subsidy bill that’s been championed for years by natural gas baron T. Boone Pickens, and was recently re-introduced and endorsed by the Obama Administration. “When that happens, people will be able to build home refueling stations which tap into their home heating natural gas lines and they’ll receive a $2,000 tax credit to install it.” But that’s just the beginning. Under the Pickens Plan bill, light duty vehicles (powered by natural gas or dual-fuel) would be eligible for a $7,500 consumer tax credit, the same amount currently available to plug-in vehicles.

It’s starting to add up. Not long ago, Edmunds CEO Jeremy Anwyl called for parity between EV and natural gas tax credits, and Honda has recently announced 50-state sales of its natural gas Civic GX. These guys are surfing a building trend. “So,” I ask, “what price point are you targeting post-tax credit?” His answer drops my jaw: “$4,000 to $5,000,” he says. I suddenly get it, and I’m floored by the idea. Low-cost, high-efficiency Chinese cars that sell at a price that’s less than half of the cheapest gasoline-powered cars on the marketplace. This is the kind of plan that has had the industry terrified, and yet has yet to be seriously pursued. And here are a couple of guys, flying under the radar, bringing a truly disruptive Chinese import to market… in Des Moine, Iowa. You can’t make this stuff up.

At this point, I stop thinking of Smith and Gabus as underdogs (or possible hucksters), and start thinking of them as a couple of shrewd operators. But, says Smith, the plan is still a huge gamble. They’ve already spent millions crashing some 32 Shuanghuan Nobles, and upgrading their bracing, fuel tanks, evaporative emissions control systems, advanced airbags and seatbelts. Having been working with the EPA and DOT for two years already, Smith confirms that he expects full DOT/EPA approval by the end of the second quarter of this year… within the next two months (Wheego has reportedly already received DOT crash-test approval). The SCEO SUV has not yet started testing, he says, and the process will take two years, so they’re starting with the Noble. Even with a crazily low targeted price point and high natural gas efficiency, there’s no guarantee that the Noble will take off. “But,” says Smith, “you have to take a chance and put some money on the table if you want to change anything.” And rather than trying to make the cover of every green magazine in the country, Smith and Gabus have started with the tough task of homologation… and now they’re almost done. Their huge bet is about to hit the table.

Before getting off the phone with Smith, I ask when he’ll next be in Des Moines. I explain that I want to meet him and Gabus at Shuanghuan Auto Des Moines, drive the Noble, and hear more about the origins of their import scheme, as well as their plans for the future. “Sure,”he says, “I’ll be there in June.” “In that case,” I reply, “so will I.” This story, which has flown below the media’s radar for two years now, is starting to take off… and TTAC will be there to cover it. By June, EPA and DOT approval should be rapidly approaching, and Smith and Gabus will be approaching the next challenge: pricing and selling these tiny Chinese cars. If the Pickens Plan passes and they’re able to hit their price points (both still “ifs,” the men admit), these industry outsiders could put Chinese cars –and Des Moines, Iowa– on the automotive map in this country. In an industry with seemingly infinite barriers to entrants, that’s a huge story… and one we’ll continue to cover.

Today, to celebrate their new 918 supercar, Porsche announced a new special edition of the venerable 911, the new Porsche 911 Turbo S Edition 918 Spyder. Boy, isn’t that a mouthful? Actually, since it’s available as a drop top, it could even be the Porsche 911 Turbo S Edition 918 Spyder Cabriolet. I admit that the nomenclature is a little confusing, now that Porsche is making a coupe with the word Spyder in its name, and putting two model numbers on one car, so just that you know what we’re talking about it’s not Porsche’s new hybrid supercar, the 918 Spyder. No, this car is indeed based on the more pedestrian (yeah, I know, it’s a car, but work with me) 911. To be sure, it’s a special 911, what with its Turbo and S suffixes, and it’s got some unique-for-a-911 carbon fiber trim and “acid-green” stitching on the leather, to effect some of the look of the 918. I just checked on TrueDelta and a regular 2011 911 Turbo S is $160,700. So how much do you think it will cost you to get behind the wheel of a 911 Turbo S Edition 918 Spyder?

How about a million dollars?

And Porsche will sell every single one that they build.

A million dollars? How could even a special edition 911 cost a mil? Even a 911 GT2 RS stickers out at less than a quarter mil. So how does the Porsche 911 Turbo S Edition 918 Spyder cost a million bucks? In what is a bid to seize the title from Ferrari for the most shameless exploiter of well healed customers in the automotive industry, Porsche is making you buy an $845,000 918 Spyder hybrid supercar before they’ll let you buy one of the nine hundred and eighteen 911 Turbo S Edition 918 Spyders that they’ll be making to match the same number of 918 Spyders in that car’s planned production run.

In announcing that the 918 Spyder will enter production, and that it will cost about twice what Porsche’s previous supercar, the Carrera GT, cost, Porsche also let prospective buyers/collectors know that to fully appreciate the 918 Spyder ownership experience, they’ll also have the chance to buy a turbocharged $160,000 “My Other Porsche Is A 918″ bumper sticker.

That’s not merely green stitching… it’s “acid-green” plus you get a badge and carbon fiber and the knowledge that you have something much cooler sitting in the garage at home.

The press release from Porsche announcing the production and pricing of the 918 Spyder finished by announcing a special accessory that Porsche would be making for 918 Spyder buyers:

“Customers who order the 918 Spyder also have the opportunity to acquire a special-edition 911 Turbo S Coupe or Cabriolet. Also limited to no more than 918 units, the 911 Turbo S Edition 918 Spyder will have exterior and interior design elements echoing the plug-in hybrid 918 Spyder supercar’s styling. It features similar exterior colors, carbon-fiber elements inside and out, enhanced leather equipment and numerous acid-green accents on items such as the brake calipers, illuminated sill plates, interior stitching and instrument cluster needles. A limited-edition badge on the glove compartment door will feature the same production number as the customer’s 918 Spyder.

Worldwide 918 Spyder customers can begin ordering this special edition 911 Turbo S sports car today, and customer deliveries will start later in 2011. The U.S. base manufacturer’s suggested retail prices for the Coupe and Cabriolet versions are the same as the standard 911 Turbo S models, $160,700 and $172,100 respectively, excluding destination..”

“Have the opportunity” indeed. Speaking of opportunity, 918 cars at $160,000+ means that Porsche will reap their share of an additional $150 million worth of MSRP. There are reasons why Porsche is the most profitable car company around. Actually I’m surprised that Porsche missed out on a revenue opportunity since they are apparently not charging extra for the Edition 918 Spyder part of the 911 Turbo S Edition 918 Spyder. The $160,700 key fob is the same price as a 911 Turbo S without green thread.

No mention was made of making the special “918″ 911s available for the general public to purchase. I suspect that Porsche expects that each and every 918 Spyder will leave Zuffenhausen with it’s own matching 911 Turbo S Edition 918 Spyder. My guess is that 918 buyers will regard the 911 Turbo S Edition 918 Spyder as just another checkbox on the option sheet. In this case they may be trying to protect residual value.

The $845,000 918 Spyder comes with a very pricey accessory

At this level, folks, the people who buy these cars have to be considering their resale value. Not because the cars necessarily depreciate. Ferrari made 399 Enzos. Each sold for over $600,000. Today you might not be able to buy a wrecked Enzo for that little. The last time I looked, used Enzos were going for over a million dollars.

I expect that those 918 918s will likewise either not depreciate or may even appreciate in value. I suspect that at the 2021 Barrett Jackson auction, the 918 Spyders that have a matching 911 Turbo S Edition 918 Spyder will fetch the highest prices. In the meantime buyers of the 918 will be able to show off ownership without putting miles on their more prized possession.

Ronnie Schreiber is the editor of Cars In Depth, a car culture site that features informed and entertaining writing along with 3D photos and video (and they work in 2D too!)

At least in the insular world of the automotive media, 2010 may well go down as “The Year Honda Lost Its Mojo.” The Motor Company’s first 2010 model-year launch, the Accord Crosstour failed to get off the ground last year, and the much-hyped CR-Z hybrid coupe launched to thoroughly mixed reviews. In fact, the new 2011 Odyssey seems to be Honda’s first big new launch in the US since the latest Accord debuted in 2008, although it’s not clear how many of the Oddy’s 10,147 December sales were leftover 2010 models. And after Acura’s 2009 model-year beak-ification, Honda’s luxury division launched only one new model, the ZDX, which sold a paltry 3,259 units last year. In short, Honda seems to have pulled off only one legitimate hit in its last five launches (including 2009′s Insight flop)… but unlike some other automakers, the big H isn’t dependent on novelty to move metal. Underneath Honda’s string of missteps are some fairly sound fundamentals… as well as signs that change needs to happen soon.

Why isn’t Honda dependent on its niche product launches to goose volume? That’s easy: Civic and Accord are a bedrock of volume for the Japanese automaker, and with strong growth in the compact crossover segment, the CR-V looks poised to join them as reliable sources of six-figure sales numbers. But even these core models are showing some signs of trouble. Honda claims Accord volume rose eight percent last year, but if you treat the Crosstour as a separate model, Accord volume actually fell 1.7%. And it’s no wonder Honda chooses to present the numbers that way: on its own, the Crosstour managed only 28,851 units last year.

The aging Civic saw a similarly flat year, with volume rising just .2% to 260,218 units. But again, Honda’s official reckoning is misleading, as it claims a .8% improvement (likely due to sales of 7,736 outgoing Civic Hybrid models). We’re used to this kind of number goosing from other automakers, but not Honda… and it underlines the fact that Honda knows 2010 was not a great year. And speaking of Civic Hybrid, the Insight that replaced it continues to be an unqualified disappointment, moving only 20,962 units, only 5,483 units more than the Civic Hybrid sold in 2009.

Luckily, Honda had a decent supporting cast of six-figure sellers in 2010, led by CR-V which moved 203,714 units last year, a 7.2% improvement over last year. Odyssey added 108,182 units, an 8.7% bump, and Pilot moved 102,323 units, a 22.8% improvement. Ridgeline and Element combined for just over 30k units. On the other hand, Fit fell 18.7% to 54,354 units and CR-Z sold only 5,249 examples. This meant that, as a whole, Honda-branded cars were down 1.3%, while Honda’s “light trucks” were up 16.5%. Still, Honda sold about 16k more cars than light trucks last year.

Acura also sold more cars than trucks in 2010… but the margin was only 129 units. TL sold 34,049 units, a 1.3% bump, while TSX sold 32,076, a 12% increase. RL continued to be a non-player at 2,037 units for the year, a six unit drop compared to 2009. MDX took Acura’s volume crown, moving 47,210 units, a 51.4% increase. RDX sold only 14,975 units, a 47.5% increase. As noted earlier, ZDX sold only 3,259 units and doesn’t seem to be gaining momentum: December sales were an anemic 253 units.

Taken together, it’s clear that Honda was ready to put 2010 behind them. With a new Civic launching next year, the firm is clearly hoping its core model sees a big enough bump to keep up with the market. After all, branching out into new segments certainly hasn’t been paying off of late for Honda. But there’s a (nearly unbelievable) silver lining to this raft of middling-to-bad news: Though the Honda brand lost .2% retail market share, Acura gained back the same amount, meaning that the firm’s overall retail market share stayed put at 12.9%. Honda may not be thriving, but (at least in the eyes of consumers) they’re surviving.

Only three automakers lost retail market share last year, as the market for new cars struggled back from the depths of “Carpocalypse.” Battered as it was by a recall scandal that engulfed most of the auto media coverage for the first half of the year, Toyota’s 1.2% dip came as little surprise. But with all the positive spin surrounding GM and Chrysler, the bailed-out automakers loss of 1.8% and .6% retail market share was a pretty huge disappointment. Ford, on the other hand, drew a huge distinction from its cross-town rivals, recording the second-largest growth in retail market share of all automakers in the US market, snagging an additional 1.2% of the market. Projecting 2010′s trends forward a year (a speculative exercise, no doubt) Ford would actually surpass GM in terms of retail market share, putting it second only to Toyota (and within spitting distance (.3%) of first place). As the bailed-out automakers lose ground in the battle for consumers (rather than volume), Ford makes a strong case for exempting itself from the “Detroit” pejorative: at least as far as consumer perceptions go, Ford has little in common with GM or Chrysler. Not that there aren’t still trouble spots…

In terms of overall volume, Ford fell just short of the 2m mark for only the second time in recent history last year, notching 1,935,462 sales. And in terms of brand strategy, the contrast to GM couldn’t be stronger: with Mercury marked for death, the entry-luxe brand added just under 1k new sales last year, and Lincoln had a thoroughly mediocre year, adding fewer than 3k new sales. FoMoCo enjoyed none of GM’s flashy sub-brand growth numbers because Ford spent 2010 working on its core brand, with the result that Ford’s 21.5% volume boost amounted to 310,697 incremental units over 2009. You have to go back to 2001 to find a time when the entire Mercury made that kind of volume in a year.

Lincoln and Mercury both lost .1% of the retail market last year, but the Ford brand attracted more new retail customers than any other brand in the US last year, snagging an additional 1.3% of the market. That makes Ford the second-most popular brand with retail consumers, with 13.2% of the market, and if 2010′s performance is replicated next year, Ford will surpass Toyota at the top of the retail market share heap. And that’s despite the fact that Ford was targeting a 30% fleet mix for 2010. Which brings up an important point: fleet sales can be OK if retail share grows as well. Where GM (specifically Chevy) is replacing lost retail share with fleet sales, Ford is growing both (and surpassing GM in government fleet sales, widely considered to be among the “best” fleet sale).

And a look at Ford’s car sales indicates that Ford is succeeding with the retail market for reasons other than the newness or hotness of its products. Jack Baruth has already marveled at the success of the facelifted Fusion, which had its best year ever, up 21% to 219,219 units. But facelifts can often account for a 20% bump… what’s truly indicative of what Ford has been able to do in the post-bailout environment is the Focus. A three year old design that has never done particularly well with critics, the Ameri-Focus ended its last full year of sales up 7.5% at 172,421 units. That’s good for 3rd place in the segment after Civic and Corolla, creaming Sentra, Cobalt/Cruze combined, Elantra and Mazda3. It’s one thing for an American brand to take third place in the C-Segment, but it’s quite another to do so with an about-to-be-replaced refresh of a ten-year-old car. And Focus was Ford’s slowest-growing car nameplate (other than Crown Vic), as Taurus was up 51 percent (to 68,859 units), and Mustang was up 10.6%  (to 73,716 units). Fiesta is off to a slowish start, but its year-end numbers (23,273 units) don’t tell much of a story, other than that gas prices are still relatively low.

Turning to Crossovers, Escape just barely lost out to Honda’s CR-V for the top volume spot among compact CUVs, growing a steady 10.4% to 191,026. Edge’s Fusion-style facelift helped bring the model back over 100k units after a poor 2009, up 34% to 118,637. Flex, however, continued to be a sales disappointment, as it lost 11.6% of its 2009 volume, falling to just 34,227 units. Considering how much better GM’s Lambdas sell (Traverse topped 100k units), the Flex’s underperformance is unforgivable. And because it’s such a goofy-looking box of a vehicle, a facelift will hardly do the trick. Ford’s doubtless banking on the Flex’s new platform-mate, the 2011 Explorer, to help give its large CUV effort a boost (and with over 10k December sales, they may be on to something there), but at this point the Flex joins the Taurus X and Freestyle in a long line of Ford failure in this segment. And given how many SUVs Ford sold in the day, this decade of large CUV irrelevance is more than just a embarrassment, it was a lost opportunity.

And though Ford showed consistency across cars and CUVs, trucks were where the Blue Oval made its money last year. F-Series was up 27.7%, which amounted to over 110k units of incremental volume. Ranger stayed flat on the year, giving up fewer than 300 sales compared to the year before, even as the compact pickup withers away. Econoline jumped to 108,258 units, most of which likely went to fleet clients, and creamed the European upstart, the Transit Connect, which managed a mere 27,405 units.

And what of Lincoln? At 85k units, its sales may have been up 3.6 percent, but incremental volume was less than 3k units, and it actually lost .1% of the retail market. That’s bad news for the brand that now holds all of Ford’s luxury aspirations. MKZ held fast last year at 22,535 units, an increase of fewer than 500 units. MKX added 499 units, to 21,932. MKS actually lost volume, dropping 16.1% to 14,417 units. That puts Lincoln’s “flagship” at about the same sales rate of other luxury flagships… like the Mercedes S-Class, which starts at twice the price of the MKS. The more comparable Mercedes, the E-Class, sold four times the MKS’s volume. MKT staged a big comeback in terms of percentages, but still only moved 7,435 units. And with December volume at 638, the MKT seems to be replicating the Flex’s failure. Thanks goodness Navigator is still around to provide 8k-ish sales every year, otherwise Lincoln’s volume would have fallen under the 80k mark for the first time in recent history.

Going into the new year, Ford’s strength will continue to derive from its Ford brand, which should improve considerably with the introduction of a new Focus, and its crossover and MPV derivatives. With retail share improvements almost unavoidable for the Ford brand, the only question mark standing in the way of its retail market supremacy is the extent to which Toyota retail share will continue to slide. But unlike Ford, Lincoln is not only sliding into irrelevance, it has little in the short-term product pipeline that can be expected to reverse its fortunes. If Ford bosses doesn’t take the rebirth of Lincoln extremely seriously, FoMoCo could find itself a one-brand automaker, without a luxury brand to boost profits on its common platforms. Still, if Ford lost both Mercury and Lincoln overnight, it would still have a comparable volume to Toyota… and that ain’t all that bad.

Our sales this year reflect the impact of GM’s new business model. The consistency of results that we achieved demonstrates the focus on our brands, dealers and customers, and how we compete aggressively for every sale, every day.

And on a superficial level, the argument certainly seems to ring true, as Buick (+51.9%), Cadillac (+34.7%), and GMC (+31.7%) were the three most-improved brands in the business last year in terms of volume. GM also delivered more vehicles than any other automaker last year, with 2,215,227 vehicles sold. Great success, end of story… right?

Wrong.

As long as the story stays on the three non-Chevy brands, the story stays happy. Buick enjoyed strong improvement in retail market share, rising .3% to match Acura at 1.4%. That seems in line with what should be reasonably expected for an entry-luxe brand, though it may be a bit disappointing when you consider the brand-new Regal is barely outselling the ancient Lucerne. Also, 52% growth isn’t quite as satisfying when you realize that, at 53,083 units, Buick’s volume improvement is a fraction of what one hot new sedan can achieve on its own (witness the Sonata’s 76,595-unit growth last year). Still, Buick has reclaimed more credibility on the market than would have seemed possible just last year (when Buick fell by 25%).

GMC’s 28.9% growth brought GM’s truck brand back over 300k units last year, en route to a .4% improvement in retail market share and 4% of the retail market. Which creates an interesting contrast: even though GMC grew slower (in terms of percentages) than the other non-Chevy brands, its retail market share was the best and the fastest-growing of the bunch. Of course trucks did better than cars last year, but that still doesn’t bode well for GM’s (magnesium-framed) future… and it hints at the lurking problem underlying GM’s entire 2010 performance (patience… we’re getting there).

Underlying Cadillac’s 34.7% volume growth was the most modest retail market share improvement of the non-Chevy brands, a bump of .2% to 1.3%. With Lexus, Mercedes and BMW battling for the luxury volume crown, Cadillac is but a bystander, with most of its 37,833-unit improvement coming from a 30k-and-change bump in SRX volume. But at 45,656 units, CTS is still competing with BMW’s MINI Cooper (45,644) rather than BMW’s 3-Series, which sold over twice the CTS’s volume. The Escalade variations added only about 2k units to the brand, while DTS and STS combined for a small drop in volume. With a full compliment of CTS bodystyles (sedan, coupe, wagon), GM is out of ways to goose its main model’s sales, which means both it and the SRX’s strong performance must continue unabated for Cadillac to grow. The Standard Of The World is now essentially a two-car brand.

But the real trouble for GM involves its most crucial brand: Chevrolet. Chevy’s growth was slowest among GM brands in terms of percentages, as the bowtie boys boosted volume 16.9% to 1,565,632 units. But, as you might have guessed by now, the problem has nothing to do with volume… it has to do with the extent to which that volume actually reflects market preferences. Although Chevrolet’s volume increased by more than 200k units last year, GM’s volume brand gave up a whopping .5 percent of its retail market share, the third-largest such slide in the industry (after Toyota’s .9% drop and Chrysler’s .7% dip). A year ago, Chevy attracted 11.6% of retail buyers, .1% behind Honda and .3% behind Ford… this year, Chevy dropped to 11.1%, as Honda climbed to 11.5% and Ford soared to 13.2%. Can you say “ouch”?

Play with these numbers a little, and you have no choice but conclude that Chevy is a brand in some real trouble. Through November, Chevy sold over 35% of its production to fleets… that’s 503,743 fleet sale units, a 66.9% increase over 2009. With GM’s overall fleet mix at 25.6%, it seems that 85.9 percent of GM’s fleet sales are from the Chevy brand. According to our sources, certain Chevy models (we’d tell you if we knew which) finished the year with over 50 percent of their sales going to fleets. And yes, fleet sales were up 27.5% over the course of the year, but Chevy single-handedly accounted for half that growth. The bowtie brand sold about 26 percent of all fleet vehicles last year, and worst of all, it accounted for 26.7% of sales to rental fleets, the worst kind of fleet sales.

Meanwhile, Chevy’s retail sales climbed a measly 1.2% through November of last year. And, as a whole, GM’s retail market share fell a full 1.8%, from 18.6% to 16.8%. That’s more retail consumers leaving The General than recall-scandal-battered Toyota, which lost only 1.2% of the retail market last year. Does that scream “consumer acceptance” or “rebirth” to anyone? Anyone at all? Bueller?

With the media firmly focused on sales percentages, particularly the gaudy increases at Buick, GMC and Cadillac, nobody seems to be noticing as Chevy systematically kills the goose that lays the golden eggs. And no wonder: overall GM’s fleet sales were an inconspicuous 25.6%, a number that’s in line with the industry average of 27.5%. But Chevrolet’s volume is the glue that keeps GM’s North American operations together, and its brand integrity will be systematically wiped out if GM bosses don’t recognize that relying on fleet-based growth is not a sustainable model for the future.