Once upon a time, GM’s North American operations spewed red ink across the firm’s balance sheet, with the whole mess kept afloat by relatively strong overseas operations. Now GM makes most of its money at home while its international divisions limp along. No, really: in its just-released Q1 financial report, GM reveals that some $1.7b of its $2.2b global EBIT came from its once-troubled home markets. What a difference a bailout makes!

GM CEO Dan Akerson sums up the situation with refreshing candor, noting

New products are starting to make a difference in South America, but Europe remains a work in progress. We’ll continue to work on both revenue and cost opportunities until we have brought GM to competitive levels of profitability. [emphasis added]

That GM is not yet experiencing the kind of hot streak one might expect from a global titan that’s been stripped of debt and loaded with government cash is self-evident. Like its share price, GM’s performance in the last quarter has been merely adequate. A billion dollars in profit is always a good thing, but around the world GM is still underperforming the market. In fact, The General lost .3% global market share. in Q1 2012, the third straight quarter of such declines, and GM’s share of the world market is now a full point lower than it was in Q2 of last year.

Even in the US market that now provides the lion’s share of its profit, GM is losing ground to the competition. North American market share has also fallen for the last three quarters, now standing at 16.4%, some 2.4% lower than Q2 2011. US dealer inventories jumped dramatically in the quarter as well, from 583,000 to 713,000. All this in the face of above-average incentives (as a % of average transaction price) and subprime financing (8.2% compared to an industry average of 6%). In light of these developments, GM’s ability to earn the majority of its profits in North America speaks to its bailout-streamlined cost structure. Still, there’s no denying that things are not headed in the right direction.

GM Europe continues to be the source of the most serious bad news, although its $300m loss is half of the Q4 2011 number. Still, restructuring and plant shutdowns will cost GM a pretty penny at some point in the not-to-distant future, and until that bitter medicine is administered, GME can only try to control its losses. GM South America turned the corner into profitability, yielding a $100m gain on its lowest production volume in over a year (albeit with steady market share).

But GM’s opaque “International Operations,” which include Korea, Australia and the crown jewel of China show some of the most troubling signs of malaise. With costs rising faster than volume and pricing gains could make up for, GMIO’s EBIT declined by $100m compared to Q1 2011. With the Chinese market cooling off, GMIO is also losing market share at a steady .1% per quarter for the last three quarters. Given how crucial China is to GM’s global future, this is not a promising development.

This is not a return to “Deathwatch” territory by a long shot, as GM still has $31.5b of government cash and equivalents on hand, and $37.3b of available liquidity. But the premise that GM simply needed a bailout in order to soar to global dominance is certainly wearing thin. And with the government waiting for an uptick in GM’s stock price to sell its stock at a politically-palatable price, mediocre results like this will allow the stigma of government ownership to linger.

Car companies severing ties with Iran are making headlines. After GM’s new partner PSA decided to stop sending parts to Iran, Hyundai “has quietly ended its business dealings with Iran, where it had extensive operations,” says the New York Times. The Times chalks this up as a win for “United Against Nuclear Iran, an American group that has advocated economic sanctions.” UANI keeps a list of companies that still do business with Iran, it also lists companies that have withdrawn from doing so. Hyundai has received a check mark in the “withdrawn” list.

Detroit is looking nervously at that list. Let’s have a look as well.

The UANI list is a veritable who’s who of the auto business. Just about anybody who is somebody is listed as having ties to the unshaven part of the axis of evil. Interestingly and coincidentally, the two American car companies that were saved by the U.S. Government are listed as still dealing with the enemy: Chrysler and General Motors. The company that was not bailed out, Ford, is not on the list of Iran-collaborateurs.

TTAC simply reprints the list as compiled by the UANI. Their list, not ours. We make no representations as to its correctness. PSA, which says it has withdrawn from doing business with Teheran, is still listed as consorting with the enemy (as “Citroen,” and again as “Peugeot”). So is Toyota, which had announced its pull-out from Iran two years ago.

It should be noted that doing business with entities in Iran is not illegal per se. There is a European embargo against Iranian oil.  The U.S.  has imposed sanctions  on Iranian imports, and on some export to Iran. Companies wanting to do business with Iran need a license from the Department of Treasury. Doing business with Iran has become increasingly complicated after Iranian banks were disconnected from international payment systems.

Because it is not illegal to do business with Iran, the UANI pressure group wants to make companies decide between business with Iran and business with the U.S. government. United Against Nuclear Iran is proposing legislation that denies U.S. government contracts to “automotive entities” that do not sever ties with Iran.

If passed, this law could become costly for General Motors. On the UANI website, GM is listed as having nearly $2.9 billion worth of  U.S. government business.

Yesterday, the UANI started leaning on Nissan, supplier on NYC’s “Taxi of Tomorrow.” When will the true recipients of government largesse, Chrysler and GM, be in the crosshairs of the anti-Iranian nuke campaigners?

While Honda and Mazda are just getting their respective footholds in Mexico (the two automakers are opening up respective assembly plants in Mexico), Nissan has had a long presence south of the border, building cars at its Augascalientes, Mexico plant for decades.

Nissan is set to build an all-new plant in Augascalientes, with a total investment of $2 billion. The plant will produce B-segment cars (such as the Versa). Nissan CEO Carlos Ghosn is on a major push to avoid exporting Japanese-built vehicles due to a strong yen. The Mexican plant will help shore up North American vehicle production, as Nissan’s Smyrna, Tennessee plant will add a range of new vehicles shortly, including the Infiniti JX, the Nissan Rogue and the Nissan Leaf. Greater expansion of the new plant, as well as facilities for suppliers were also in the cards.

With the goal of becoming Latin America’s top Japanese OEM, as well as outselling Honda in the United States, the new plant is crucial to Nissan’s plans. Nissan is hoping to have the factory producing cars in less than 24 months.

Ever since the ill-fated Contour experiment, Ford has maintained a strict separation in its global midsized offerings: Fusion for the Americas and Mondeo for Europe (let’s ignore, for the moment, Australia’s Falcon as the doomed atavism it is). But under the global “One Ford” strategy, a fusion (ahem) of The Blue Oval’s midsized offerings was inevitable, and Ford has signaled for some time that the Fusion and Mondeo are on the verge of becoming one. And here, courtesy of the autoforum.cz, is the first leaked image of Ford’s unified, world-wide midsized contender: though the Fusion and Mondeo names will continue to be used in their respective markets, this car will carry both badges. But are we looking at a revolution in the oft-troubled “world car” game, or a repeat of the Contour’s compromises? Only time will tell…

Once upon a time, the Dodge brand was brimming with pride. In the mid-to-late 1990s, Dodge had it all: affordable compacts, big front-drive cruisers, the hottest trucks on the market, and of course, the Viper. And when the times were good, all of those part melded into one brash, exciting, quintessentially American brand. From Neons and Intrepids, from Rams to Vipers, Dodge could do it all, as long as “it all” included a healthy dash of in-your-face attitude. But over the years, as Dodge’s shining moment faded into memory, the brand has managed to become both less viscerally appealing and less well-rounded. And when Fiat’s leadership stripped Dodge of the Ram “brand,” shucked its designs of their truckish cues, and repositioned Dodge as a more “youthful” and “refined” sporting brand, it seemed as if Dodge as we knew it was dying. Since hearing of Fiat’s plans to bring Alfa stateside, and with Dodge appearing to have lost out in brand alignment product battles, we’ve been wondering for some time now if Dodge isn’t headed out to pasture. Now there’s even more evidence that Dodge is being hollowed out en route to replacement with Alfa, as Automotive News [sub] reports

Absent from the redesigned SRT Viper will be the name Dodge… Viper has been linked to Dodge since the Dodge Viper RT/10 concept debuted in 1989. The first Dodge Viper SRT-10 went on sale in 1992, and over the years 28,056 Vipers were produced, according to Chrysler.

Not any more. Essentially, SRT becomes a brand with its own vehicle, in this case the SRT Viper.

That’s right, Dodge won’t have a Viper or a Ram (or, more prosaically, an Avenger or Caravan). Some might argue that, absent these components, the Dodge name doesn’t mean much of anything anymore. Certainly it doesn’t seem that Dodge can have a particularly bright future without any links to its last moment of glory.

Chrysler Group insists that the branding shift has nothing, NOTHING, to do with any elimination of the Dodge brand. In the words of a Chrysler Group spokesman,

SRT is the high-performance end of the company. The whole brand philosophy and the branding separation between Dodge and SRT will evolve over time. This is kind of that first step establishing what SRT means to the company and what that car means to the brand.

The other side of the company’s argument: the Dodge brand has “baggage” in some global markets, and by branding it as an SRT, the Viper can have a unified global brand and be sold (theoretically) at Alfa and Maserati stores. On the downside, these kinds of sleight-of-brand moves don’t tend to fool anybody, and more to the point, how many consumers know anything about the SRT “brand”? But all that aside, the mere existence of an SRT brand seems to trade off directly with Dodge’s continued success. After all, without trucks or performance halos, what exactly is Dodge again? And with Dodge’s post-Fiat-takeover brand boss Ralph Gilles jumping from Dodge to SRT, it seems that the corporate winds are blowing the once-proud Dodge brand towards oblivion. Perhaps Alfa will ultimately prove to be the more compelling performance brand, but in the short term, Fiat-Chrysler seems to be trading in one potentially strong brand for two relative unknowns.

Lotus is one of those brands that every auto enthusiast loved to lionize, despite (or possibly because of) the fact that it hasn’t made a profit for its owner, Proton, in 15 years. But now things are changing. Lotus itself is in the midst of a makeover, seeking to transition from niche sports- and track-car company to a Ferrari and Porsche-rivaling aspirational brand. Meanwhile, back in Malaysia, its owner, Proton, is undergoing a few changes itself. Having been founded as a state-backed business, Proton may soon be privatized, reports Bloomberg. And as a result, Protons private investors could push for a quick divestment of the firm’s Lotus holdings. One such investor, Gan Eng Peng of HwangDBS Investment Management, tells Bloomberg

It will make sense for them to sell it. Proton and Lotus are not a good fit. They are in different market segments, both in terms of geography and product.

Chinese automaker SAIC and Genii Capital have been rumored as possible buyers, although Proton denies all rumors that Lotus is for sale. The problem is that Lotus won’t be worth much until 2014, the brand’s earliest projected break-even date. And even then, Bloomberg’s analysis shows that Lotus’s highest possible value then still wouldn’t be enough to return Proton to profitability, in light of increased competition in its home market of Malaysia. But in the meantime, Proton has no (useful) synergies with Lotus, and as the automaker emerges from the warm embrace of government ownership into the harsh light of the global market, it seems that selling off Lotus may be unavoidable.

Which leads to an interesting question: which automaker seems most likely to buy up Lotus? My money is on VW, who might buy the brand for no other reason than to kill off Alfa, after Fiat refused to sell. Of course, then it might create branding challenges with Porsche, but Alfa would have done so anyway. Another possible buyer: Toyota, which supplied Lotus with engines for years. In any case, we can probably count GM out of the picture, after their abortive relationship with the British brand.

One question that Bertel and I find ourselves returning to again and again in our regular conversations is “what will be the first Chinese-made car sold in North America?” We’ve agreed for some time that the groundbreaking first Chinese-made import would come from an established non-Chinese brand, rather than one of the many newer Chinese brands, but our usual suspects typically ranged from GM to Volvo (EV maker Coda builds what are essentially “knock down” Chinese made-cars, but technically they qualify as US assembled, as does Wheego). I don’t think the name “Honda” ever came up in these discussions, but sure enough, the NY Times reports

the Japanese automaker Honda is crossing the threshold by importing subcompact cars into Canada from one of its plants in China. This month, Honda Canada began receiving its smallest model, the Fit, from China instead of Japan, as part of a strategy to produce more vehicles outside its home country.

The decision allows Honda to eke out higher profit in a segment of the auto market where margins are extremely thin, especially since the high value of the yen cuts into all Japanese automakers’ overseas operations.

“The yen has been getting stronger and stronger,” Jerry Chenkin, executive vice president of Honda Canada, said on Tuesday.

Of course, Honda has yet to bring a Chinese-made Fit to the US, where antipathy towards Chinese products is greater and automotive diversity is lesser than in the Great White North. Also, the importation of Chinese Fits is seen as a temporary response to the high Yen, while Honda builds a new plant in Mexico for Fit production, scheduled to open in 2014. Still, this is a significant development, presaging the inevitable importation to the US of Chinese-built vehicles.

When we last checked in on the low-level trade war between China and the US, which was sparked by President Obama’s 35% tariff on Chinese tires, the Chinese government had ruled that American large cars and SUVs were being “dumped” on the Chinese market, but wasn’t doing anything about it. Now, Reuters reports that China is doing something about it, namely saying that it plans to impose tariffs of up to 22% on imports of American-built large cars and SUVs. And the “up to” is key: GM and Chrysler are being hit hardest (unsurprisingly), while American-made BMW, Mercedes and Acuras are receiving considerably lower tariffs.

Still, China only imports $1.1b worth of vehicles in this category, whereas the US imported some $1.8b worth of Chinese tires prior to the Obama tariffs.  Like most of the news around Chinese-American relations, this is more saber-rattling than substance. But with economic conditions still shaky in the US, and a Presidential election getting into full swing, small spats can escalate into larger confrontations. And with China surpassing the US as the largest market for cars in the world, it’s probably no coincidence that this simmering conflict largely involves cars and car-related products.

At the beginning of this year, the United Auto Workers pledged that it would launch a campaign to organize the foreign-owned, non-union “transplant” factories in the US, threatening to tar uncooperative automakers as “human right abusers.” The campaign initially lost steam, but the UAW stuck to its pledge, re-iterating on several occasions that it would organize “at least one” transplant factory by the end of 2011. With one month left to accomplish that goal and no signs of progress in sight, the UAW has officially called off that goal. In fact, the UAW now hopes to simply pick an automaker to target by the end of 2011. Spokeswoman Michelle Martin tells Bloomberg

At this point, our hope is to make a decision about who we’re going to target by the end of the year. But obviously, we won’t have the organizing campaign completed by the end of the year.

This is not too surprising, considering the UAW announced last week that it would be focusing on dealership pickets initially rather than factory organizing. And sure enough, the first dealership picket has begun, targeting Hyundai dealerships. And yet, says Martin

This has nothing to do with the domestic organizing campaign. Hyundai is not the target.

Huh? If the UAW is not committing to organizing Hyundai’s assembly workers, why picket Hyundai dealerships?

The Freep explains that the union is targeting 75 Hyundai dealerships, in order to show international solidarity, a recurring theme in the presidency of UAW boss Bob King. Says King

The UAW has embraced a global vision of social justice and will mobilize its membership to defend labor rights here and in other parts of the world

So, what is the UAW picketing in solidarity with? Martin tells the Freep that Hyundai’s Korean unions are picketing across Korea to protest the firing of a worker whistleblower. According to Martin

The worker, who is employed by a Hyundai subcontractor, was fired after she reported the sexual harassment in 2010 to Korea’s National Human Rights Commission… The commission ruled in the worker’s favor and ordered the subcontractor to pay damages and rehire the worker, but the subcontractor has refused.

A UAW statement adds

Holding banners that read, “Stop Sex Discrimination at Hyundai” and “Reinstate Ms. Park,” UAW members from Los Angeles to New York, at more than 75 different dealerships, informed American auto buyers about an injustice to an autoworker on the other side of the globe.

“Though we may work for different companies and in different countries, as workers, we support each other’s struggles and know that one of the best ways to hold our employers accountable is through consumer action at dealerships,” said Mike O’Rourke, an 33-year employee and president of UAW Local 1853 at General Motors’ Manufacturing Facility in Spring Hill, Tenn.

Hyundai Motor America’s response: the worker was an employee of a subcontractor at Glovis, a Hyundai “affiliate,” therefore

the issue has nothing to do with Hyundai Motor Company

In other words, the UAW will be alienating itself from Hyundai’s US workers and dealers over one person who doesn’t even work for Hyundai. Standing on principle is great, but trying to block sales of cars will not exactly endear Hyundai’s assembly workers to the union. Meanwhile, similarly to the UAW’s last protest against Hyundai, there doesn’t seem to be as much moral clarity on this issue as the UAW would like it to appear. Of course sexual harassment has no place in the workplace, and  the circumstances of this case in particular do not sound good, but by hammering on the treatment of contracted employees, and by associating the contracter “affiliates” with the automakers they work for, the UAW opens itself up to criticism along the same lines.

The Freep is also reporting today that the UAW has called off a protest that was planned at GM’s Orion Assembly plant, over contract negotiations with a supplier at that plant. Workers at the GM affiliate supplier LINC, who organize and deliver parts for the Orion plant, make ten dollars per hour, less even than the “Tier Two” wages that most Orion assembly workers make. And yet, with GM’s stock (which funds part of the UAW’s VEBA account) remaining weak, it seems unlikely that the union will actually protest, let alone strike, over the LINC wages. Which raises a tough question for the union: why are they so concerned about transplant workers making $14.50 per hour and up when they are working alongside folks making $10 per hour? And if workers at a Hyundai supplier are Hyundai’s responsibility, why isn’t the UAW livid at GM for allowing LINC to hire workers for such low wages? And in light of these fundamental contradictions, a single case of apparent injustice half the world away seems even less relevant.

Chrysler’s latest “Imported From Detroit” ad, which seems to be trying to convince itself to “see it through,” continues the brand’s recent tradition of associating itself (perhaps a bit too closely) with the trials and tribulations of the city of Detroit. That approach, like the 300 itself, might play well in parts of the US market… but Chrysler needs its cars (and ads) to do more. Imagine how this ad might go over in Berlin or Milan, and you might catch a glimpse of Chrysler’s larger challenge: making its cars relevant globally as both Chryslers and Lancias.

Chrysler’s marketing honcho Olivier Francois may think that Chrysler and Lancia combine to create a “superbrand,” but of course it’s not that easy.

After all, what on earth says Lancia about the new barely-disguised “Thema”? It seems that Mr Olivier was filled with the “see it through” spirit when he claimed that the two brands were a perfect match: necessity, not compatibility made the marriage between Chrysler and Lancia. And considering they combined for less volume than Alfa in the European market through the first three quarters of this year, it’s pretty clear that this shotgun marriage isn’t going much of anywhere. And no wonder: in the words of Robert Verganti, a management professor at Milan Polytechnic [via Bloomberg]

It’s extremely difficult to succeed in a strategy of globalizing design. The risk is making international cars with no personality. When you buy a Lancia, you are looking for a piece of Italy, and when you choose a Chrysler, you are getting a slice of America.

Which is why Fiat’s former Ferrari, Maserati and Alfa designer, Lorenzo Ramaciotti, has taken the lead on the Chrysler-Lancia branded design portfolio. If anyone is going to find designs that simultaneously says “Chrysler” and “Lancia,” it’s the guy who designed the Quattroporte, GranTourismo, F430, and Alfa 4C Concept… right? Says Ramaciotti

We are trying to find an international language, which could have a place both here in Italy and in the U.S. If you put all the models into the showroom, they must fit together. It’s a delicate problem. We don’t want to do pure badge-engineering; it has never worked well in the long runWe should be global in sharing platforms and strategies without dulling the product line.”

Well, if nothing else, there’s the proof we finally need that the only people who think rebadging can work are marketers with nothing else in their bag of tricks. In all seriousness, the fact that Fiat-Chrysler has someone with that perspective leading global Chrysler/Lancia design can only be a good sign. After all, I may not be a big fan of Mr Ramaciotti’s Maserati Kubang SUV, but at least it doesn’t look like a rebadge. Although speaking of the Kubang, Bloomberg’s conversation with Ramaciotti does bring up one other point that the old designer might not be able to do anything about: the fact that Chrysler’s large cars and SUVs may not sell well as Lancias regardless of their designs.

“People are coming into the showroom to have a look,” said Roberto Ferrari, who owns a Lancia dealer outside Milan. “Reactions are good. The Thema is pretty, design is attractive for Italians, too, but no one is buying these kinds of cars now,” because the debt crisis calls for understatement.

Lancia’s real problem is that 90% of its sales come from the next country in the Euro sovereign debt crisis line of fire. In that environment, any Lancia is going to face sales challenges, let alone a large, Chrysler-derived Lancia. With Europe reaping the whirlwind economically, perhaps now is the time for Fiat-Chrysler to bite the bullet, drop its weakest brand, and let Mr Ramaciotti get to work designing, passionate, lust-worthy Chryslers. Better to concentrate on creating Chryslers that are appealing the world over than to fret over how to Americanize European cars for Chrysler and Europeanize American cars for Lancia.

The growing markets of the world want flexibility. That means power and capability combined with comfort and efficiency. TrailBlazer does it all. You can tow anything, go anywhere, comfortably seat seven people, and do so with the fuel efficiency associated with a smaller, less capable vehicle. It’s the complete package

But Americans don’t want any of that. Americans want a nice, car-based Equinox or Traverse. And that’s just what they’ll continue to get…

[H/T: Our man in Korea, Walter Foreman]

I was still a little shook-up from the treatment administered by Matsuda-san, and it must have shown. “Why don’t you get some fresh air?” was the polite Japanese suggestion.

An Infiniti G37 Convertible was the appropriate way to enhance the flow of seaside breeze around my still pale nose. I sat down. Buckled up. Pushed start. Put the 7 speed automatic into drive. Put my hands on the steering wheel. However …

… there was no steering wheel. The spot where they have a steering wheel in countries such as Japan, the UK,  Australia, Hong Kong, Thailand, and the U.S. Virgin Islands gave me a nicely appointed, but nonetheless blank stare. I sat in the right place.

But I was slipped an export model, with the steering on the left. Sheepishly, I traded places. Everybody pretended not to have seen.

It’s becoming increasingly clear as time goes on that the Chrysler five year plan promulgated in November 2009 was merely a stopgap strategy aimed at stabilizing the then-recently-acquired firm while CEO Sergio Marchionne plotted a strategic course globally. Now, with news that Alfa is going to be re-launched with the US as its major focus (possibly replacing Dodge), we’re getting a better and better picture of where the Sergio Show is headed with his transatlantic alliance. In an interview with Automotive News Europe [sub], Marchionne gives the latest snapshot

In his vision, Alfa Romeo and Jeep both have the DNA and the rich history capable to make them the alliance’s two global brands. “We need to continue to globalize Jeep and Alfa, so the development of architectures and engines that are designed to support these two brands is crucial, and everything else becomes almost secondary,” he said.

Chrysler clearly won’t be a global brand, as its products are rebadged as Lancias in Italy. Fiat will offer full lineups in Europe and South America, but only the Fiat 500 will be a truly global brand, in a role Marchionne compares to BMW’s MINI. Dodge doesn’t even rate a mention in this interview, which can only be interpreted as more evidence that it will be lucky to survive at all.

Though the alliance’s two namesake brands, Fiat and Chrysler, won’t be used on a global basis, branding will be extremely important to the company’s future. In Marchionne’s words:

By 2014, we expect Fiat-Chrysler to reach 5.9 million units and we will have just three main architectures that drive more than 80 percent of that total volume. I have never lived through a period with this level of complexity and this level of optionality

It’s not surprising that Marchionne has chosen Alfa and Jeep to represent his cobbled-together empire globally; clearly they are the two strongest brands in what is now a somewhat bloated portfolio. But this latest development raises two fundamental questions: first, what happens to Chrysler/Lancia and Ram/Dodge, and second, can Alfa and Jeep really move 80% of their volume to three common platforms and maintain their brand integrity? Because if not, it won’t take long before Marchionne finds himself with three platforms and a whole mess of compromised, past-their-prime brands. It’s good to see that Fiat-Chrysler global strategy is beginning to take shape, but this one is clearly not without its risks.

In an era of increasingly-globalized automobiles, the “market-to-market adjustments” which modify a global vehicle to “local tastes” are becoming an interesting source of insight into a company’s perspective. And  Chevrolet Europe boss Wayne Brannon revealed one of the more significant adjustments in recent memory (because nobody reads the press releases), when he told Automotive News [sub]‘s Dave Guilford

I just switch it into extended range mode, and I drive on fuel until I get there. When I drive in the little villages and towns, I drive in electric mode.

The reason it was important here is we have cities — like London — where you don’t have to pay a congestion charge if you’re running purely on battery. You save the battery for when you need it.

Gosh, that’s an interesting idea. It would certainly help clear up some of the confusion in the marketplace about why the Chevy Volt is the way it is. Imagine the tagline: “Gas or electric? You decide.” So, how about it, GM? Will that feature come to the US?

According to GM’s Volt spokesman Rob Peterson,

There are no plans to add this feature in the U.S., as regulations require the vehicle to operate in its most fuel-efficient/ lowest emission mode first.

But as Guilford points out, Fisker’s Karma can switch between all-EV and range-extended modes (more on the Karma’s efficiency shortly)… and the EPA can’t think of any reason why GM couldn’t include this mode. The problem, it seems, is that it would lower the Volt’s already weak-for-a-green-halo-car range-extended efficiency. European fuel economy numbers for the Volt aren’t yet available to confirm that theory, but Chevrolet Europe claims “over” 500 km from the Volt’s 9.3 gallon gas tank, working to about 7 l/100 km, or 33.4 MPG. That seems roughly in line with EPA numbers, but even when official European numbers are released, differences in testing methods will make apples-to-apples comparisons difficult.

At its heart, the Volt is a car that appeals to an emotional conundrum: the desire for gas-free driving without the range limitations of EVs. Instead of relying on computers to continually adjust the gas-electric mix as a Prius does, it empowers drivers to use it as efficiently as possible, plugging in as often as possible. And yet, as this European-market feature reminds us, that uncoupling of pure-EV and gas-dependent modes is actually an illusion. This reality, along with a grandstanding media culture, explains why so many people freaked out when they found out that the Volt’s gas engine gets more involved in “EV mode” than GM had let on.

Here’s the point: nobody is going to change their mind about the Volt over a few range-extended mode MPGs. But giving the power of pure-EV driving (or not) to consumers can’t help but help the Volt’s marketing effort with the “I want an EV, sort of” crowd. The Volt has never been about pure efficiency, it’s a source of psychological satisfaction. The choice of gas or electric power seems to play right into that positioning. And now we know it’s possible. Over to you, GM…

Industry leaders, usually known for their unfatiguing optimism, are more and more taking a cautious stance. GM’s CEO Dan Akerson predicts flat industrywide U.S. auto sales in 2012, while his colleague Carlos Ghosn, chief of Renault and Nissan, has feelings of “very great uncertainty” when he looks toward 2012.

In an interview with Automotive News [sub], Akerson said GM predicts “flattish” U.S. light-vehicle sales for next year. And that only if Europe’s debt crisis is not contagious and won’t affect the U.S. economy. Akerson sees the EU crisis as the biggest threat to auto sales and to the global economy.

For 2011, GM predicts U.S. light-vehicle sales will finish at around 12.7 million or 12.8 million, and for 2012, there won’t be much more: “As we go into ’12, we’re looking for kind of a repeat of ’11,” Akerson said. The pent-up demand will have to remain pent-up for a while.

Meanwhile in France, Carlos Ghosn said that “for 2012, we are all currently in a state of very great uncertainty for the time being.” Ghosn also fingered the debt crisis as a threat. Ghosn told Reuters that there “could be some grounds for optimism in 2012 if Europe managed to solve its sovereign debt crisis.” However, he does not see that happening anytime soon, because countries are not in agreement on the measures needed.

This time around, it also does not look like China will bail out the auto industry, as it happened in 2009 and 2010. At the Global Automotive Forum in Chengdu last week, none of the captains of the Chinese car industry doubted China’s long-term potential. But all were in agreement that next year, the industry won’t see much growth.

In Japan? Don’t ask.

Director Cees ten Broek explains

When vehicle emissions assessments are focused solely on the emissions produced during the driving phase (tailpipe), it encourages the use of greenhouse gas-intensive materials in the effort to reduce vehicle weight and fuel consumption. However, this may have the unintended consequence of increasing greenhouse gas emissions during the vehicle’s total life cycle. Regulations that focus only on one part of the vehicle’s life cycle will become immediately out of date as the electric vehicle becomes more prominent on the road. We are only shifting the problem to other vehicle life cycle phases.

It’s always interesting to watch industries react when their self-interest suddenly aligns with idealism, but steel industry self-interest isn’t a reason to reject this idea out of hand. A study by the engineering firm Ricardo [PDF here] shows that as batteries and lightweight materials increase the amount of “embedded carbon” in cars, the production-side emissions are expected to reach 57% of life cycle emissions. In light of this trend, it’s not difficult to see why regulating tailpipe emissions alone makes little sense in a comprehensive carbon-regulation scheme. But, as the Ricardo study also shows, life cycle analysis is difficult and complicated. Imagining those complex calculations being fed into the complexity of a CAFE-style program literally makes the mind boggle.

Editor’s note: GM has officially confirmed what the UAW already let slip: Chevy’s new midsized Colorado pickup will be built at the Wentzville, MO plant and sold in the US. More details on that decision are forthcoming, but in the meantime, here’s Edd Ellison’s report from the global launch of the Colorado in Bangkok, Thailand.

Chevrolet has launched its new-generation Colorado in Thailand where it will be built and exported to 60 global markets. In true GM style, the ceremony was lavish – a cluster of truck ploughed their way through a large field of crops planted in a Bangkok exhibition hall watched by the media, dealers and VIPs packed into several grandstands – and the message was just as upbeat, the automaker feeling it has a product that can compete in the crowded mid-size segment.

In ten days time Thai customers will be able to pass judgment on whether GM have got this right, quickly followed by Malaysia, Indonesia and the Philippines. The New Colorado has to make up ground – the outgoing model, introduced seven years ago, never gained traction with consumers, particularly in the U.S. where robust initial sales tailed off very quickly. In the developing world, customers continued to prefer offerings from Toyota, Mitsubishi, Nissan and Isuzu – the latter somewhat ironically, as it shares its architecture with the Colorado.

GM is confident it has dotted all the ‘i’s and crossed the ‘t’s in developing the new Colorado. It has been a long and expensive project, involving the refitting of the Rayong factory, the construction of new engine plant next door to produce the new family of diesel engines, while styling was carried out in the carmaker’s Sao Paulo studios and extensive R&D was undertaken in Thailand and elsewhere. “It’s the most clean-sheet mid-size truck programme,” in GM history, said Martin Apfel, President GM Thailand/South East Asia.

According to Brad Merkel, GM Global Vehicle Line Executive, the big lesson which came from listening to customers was that they perceive pickups as “rough and tough” – but they don’t want “rough” to be a fundamental characteristic anymore, or even see why it should be. Growing aspirations and consumer demand that sees half of all pickups in Thailand bought as private cars has seen all OEMs scurrying to improve the comfort and luxury of their trucks. Toyota, the mid-size market leader, improved its Hilux this summer, and the others are following suit. Merkel says that the truck is now “refined” and points to the lack of vibrations, improved stability, and the dialing out of wind noise and rattles as key achievements. “It feels car-like,” he reckons.

The new Colorado will start from a low base here – 7,347 sales for the year to the end of August. That compares with 100,187 Hilux sales for tsunami-hit Toyota, 91,161 for the Colorado’s twin, Isuzu’s D-Max, 41,508 for Mitsubishi’s Triton and 16,032 for the Nissan Navara.

GM is anxious to emphasise the new project hasn’t been conducted in tandem with Isuzu, the two focusing on different directions after developing a common architecture. Addressing perceptions that the Colorado is more expensive to run has been a priority – the new model will go 20,000 km before its first scheduled service, while 100,000 km of running should be achieveable for a cost of no more than 20,000 baht.

Styling-wise, much of the design language has been carried over from the acclaimed Colorado “show truck” displayed at several major motor shows this year; however, some of that impact has been lost in the translation to production reality. The front end is dominated by Chevrolet’s twin-grille ‘family’ look which works quite well on what aims to be a big, butch pickup. It’s grown, too – the Colorado is now 5347mm long and there is a healthy choice of seven body colours. Inside the cabin is quite well laid out, but – as is to be expected with a pickup – there is a lot of hard plastic. The air-con controls are nicely laid out and backlit, there are umpteen storage areas and decent seats, but a number of areas, such as the instruments and door catches, feel basic and a bit clumsy.

The new four-cylinder diesel engines are based on the 6.6-litre V8 Duramax. They come in 2.5 and 2.8 litres and can be mated to 5-speed manual or 6-speed auto transmissions. The 2.5 (which should account for 75-80 percent of Thai sales) develops 150 HP and 350 Nm while the 2.8 has 180 HP on tap and 440 Nm (manual) or 470 Nm (auto).

Underneath, the body-on-frame chassis has been stiffened in torsion, and there are the expected safety features including front airbags, ESP, ABS, BA, CBC, HBFA and a deformable steering column.

GM is cautious about putting numbers on targets. The Rayong plant will assemble 12,000 new Colorados up to the end of this year, but management say they will be following demand. Capacity is likely to be around 100,000 units a year with a split between domestic and export. Only the 2.5 has been priced so far; it starts at 537,000 baht for the single cab, rising through extended/double cab, low/high ride and 2/4WD before reaching a range-topping 808,000 baht. That leaves the Colorado pretty much in line with existing pickup pricing here.

Edd Ellison is a Thailand-based auto journalist, covering the ASEAN markets and beyond. He can be contacted at edd@interfuture-media.com

Hyundai and Kia are technically separate companies, with Hyundai owning less than 50% of its junior partner. But as the two major divisions of the Hyundai-Kia Motor Group, the two firms share resources and align their strategies through carefully-maintained relationships in the classic Korean chaebol (conglomerate) fashion. Hyundai has long been the senior partner in the relationship, getting the newest technologies and the most expensive new cars. But in both Korea and abroad, Kia is beginning to catch up with its big brother, raising questions about the future shape of its delicate relationship. Together, Hyundai and Kia enjoy a dominant position in Korea, earning 45.2% and 33.2% of the overall Korean market in 2010 (including commercial vehicles).  But if you just look at sedans and SUVs, the Korea Herald reports that their 2010 market share numbers are much closer: 39.6% and 35/7% respectively, and converging

Hyundai Motor Group is focusing on the possibility that Kia will catch up with Hyundai within one year in terms of monthly market share ― for sales of sedans and sport utility vehicles ― domestically for the first time…

The gap for sales of sedans and SUVs have continued to narrow ― 22.9 percentage points in 2007, 17 percentage points in 2008, 15.4 percentage points in 2009 and 3.9 percentage points in 2010.

And this fresh-brewed sibling rivalry isn’t just about Korea: around the world, Kia is catching up. And this shifting relationship is shaking things up at the highest levels of the group’s leadership.

Fox Business reports that, last month in Korea

Kia’s domestic sales rose 4.4% but Hyundai’s slid 1.1%.

And that differential could be higher if it weren’t for the company’s single largest “problem”: demand is outstripping supply. The Korea Herald notes

“Some purchasers of Kia cars have to wait two or three months to see their products due to the weaker production capacity,” a local dealer said.

So, why is Kia pulling ahead of Hyundai in Korea? The Herald opines

Automobile dealers attributed Kia’s noteworthy sales performance in the local market to growing popularity of four models ― K5, K7, Sorento R and Sportage R.

Kia Motors has been successful in attracting Korean consumers by launching cars with innovative designs after the company scouted Peter Schreyer, a car designer known for helping to create the New Beetle and the Audi TT, in 2006.

And Automotive News [sub]‘s Rick Kranz has a similar interpretation

While the styling for the Sonata has been a home run in the United States, the Korean market initially was turned off by what some buyers might say is the car’s audacious design language, which Hyundai calls “fluidic sculpture.”

Simply, the Korean market apparently prefers something less radical; judging from Hyundai’s past model line, maybe “ultraconservative” is a better term.

“There are some people who are very critical of our (design) activities” in Korea, Cho Won Hong, Hyundai Motor’s chief marketing officer, told Beene. “However, we believe we should continue to apply this design identity.”

And because both firms are seling more vehicles than they can produce, a decision will have to be made at the top of the group’s leadership in order to determine how to invest in future production capacity. And because that decision will define relations between the two firms, it has huge political implications. The Herald notes

Executives of Hyundai Motor Group, however, are allegedly taking the situation seriously.

Should Hyundai be overtaken by Kia at home, the automaker will see its brand image as the long-standing No. 1 carmaker of Korea undermined and overseas sales damaged.

“It is quite interesting whether Hyundai Motor Group chairman Chung Mong-koo and his only son Eui-sun, CEO of Kia Motors, will tolerate the scenario,” a dealer said.

Meanwhile, there are already signs of change at the top of the chaebol. Last week, the WSJ [sub] reported

Hyundai announced Friday the retirement of Chief Executive Yang Seung-suk, who ended a nearly three-year stint in the post, during which time the car maker outpaced the competition in one of the industry’s worst downturns. In March, Lee Hyun-soon, Hyundai’s head of research and designer of the company’s first engine, also retired abruptly.

Hyundai’s ability to absorb such high-profile departures is rooted in a complex management structure built around Chairman Chung Mong-koo, the son of the company’s founder. Its day-to-day operations are handled by a suite of executives, the most visible of which in recent years has been Mr. Yang, known outside of South Korea as Steve Yang.

Mr. Yang was chiefly responsible for nondomestic operations and global marketing for Hyundai, which, with its affiliate Kia Motors Co., is the world’s fifth-largest car maker by unit sales.

In a statement, Hyundai said Mr. Yang’s duties would be divided among two executives, Mr. Chung and Kim Eok-jo, but neither would immediately receive the CEO designation.

The consolidation of power around Mr Chung, and the rise of executives with strong ties to Kia (which Mr Chung personally oversees), caused Wards Auto [sub] to report

Some analysts say Kia has outperformed Hyundai in the domestic and some overseas markets, speculating the two executives initially were brought over to provide a spark.

Is Kia coming into its own? Certainly US sales of the brand are nowhere near Hyundai’s blazing growth, but globally the balance of power appears to be shifting. We’ll certainly be keeping an eye on this emerging sibling rivalry.

And though the possibility of a simultaneous global launch is still out of reach (video of the Korean launch can be found here), this model is a key element in GM’s globalizing effort, replacing not only the US Malibu, but also the Daewoo Tosca (a.k.a Chevy/Holden Epica). We knew GM has way too many architectures across its global lineup, but were you aware that the Tosca/Epica had optional Porsche-designed transverse straight-six engines, in 2.0 and 2.5 liter configurations? Neither did I. But with the new Malibu, it’s straight-up-and-down GM: the Epsilon II platform, with 2.0 or 2.4 Ecotec engines (in Korea, anyway… an all-new 2.5 liter engine is on tap fro the US). We may be quick with the Daewoo jokes, but this new Malibu is doubtless making the automotive world a much smaller, more homogenous place. Welcome to the future… [Hat Tip to our man in Korea, Walter Foreman}

Considering the United Auto Workers’ VEBA fund is still Chrysler’s second-largest shareholder, CEO Sergio Marchionne is taking an amazingly hard line with the union. With a GM deal long done, and Ford’s deal moving towards approval, Chrysler is the last automaker on the UAW’s to-do list… and Marchionne tells Bloomberg he’s up for a fight if necessary, saying

I sincerely hope that we don’t have to get to arbitration. But if necessary, Chrysler will go there. We and GM are completely different

Marchionne is reportedly pushing the UAW for a number of tough concessions, including a mere $3,500 signing bonus (compared to $5k at GM and a reported $6k at Ford), and the elimination of a planned 2015 cap on entry-level “Tier Two” workers (at 25%). And though both of these are tough asks, he’s using UAW boss Bob King’s concept of union internationalism as a cudgel against the UAW, playing Italian unions off their American counterparts. And as a result, he could earn Chrysler a favored place among America’s unionized autoworkers.

The key to Marchionne’s Italian strategy was to threaten Italian unions with the prospect of Fiat pulling out of its home market and retrenching in lower-cost production centers like Poland and Brazil. That agreement eventually went through, and, as Bloomberg reports

Marchionne reached three labor agreements in less than a year as part of his strategy of raising productivity at Fiat’s domestic plants. The deals at all three factories include measures to limit strikes and curtail absenteeism.

Fiat also won approval to introduce longer shifts and run plants on a six-day workweek. In addition to more hours, workers get shorter breaks and postpone lunch until their shift’s end.

The changes at Mirafiori, Fiat’s oldest plant, in January were won with a 54 percent majority and set a milestone in Italian labor relations.

And to prove how serious he is, Marchionne has even withdrawn Fiat from Confindustria, Italy’s largest business organization, over difficulties in applying those reforms uniformly across its Italian production base. Says Marchionne in his withdrawal letter

Fiat, which is engaged in the creation of a major international group with 181 plants in 30 countries, cannot afford to operate in Italy in an environment of uncertainty that is so incongruous with the conditions that exist elsewhere in the industrialized world

And, having manhandled the Italian unions, Marchionne is not only asking the UAW for tough concessions, but he’s also setting a deadline that could send negotiations into arbitration (since the UAW has a no-strike agreement with Chrysler). Which gives Berkley professor and UAW mouthpiece Harley Shaiken cause to warn Marchionne that

He’s rolling the dice

But with Marchionne approving new products, including a 5-door Alfa-Romeo MiTo, and small Fiat and Jeep SUVs, for the Mirafiori plant, he’s offering carrots as well as sticks. And the longer the UAW waits to get a deal with Chrysler, the more carrots could be distributed around the globe… which means fewer carrots for the UAW. And at this point, the UAW’s Chrysler employees can’t afford to hurt their employer, which has largely funded their benefits with its own stock. Look for Marchionne to come out of this negotiation looking like the smartest guy to ever take on the UAW.

The NYT’s opinion page has a provocative piece by Siddhartha Deb today. It explores the role that automobiles play in the class dynamics of a modernizing India. Deb writes

Until the mid-1990s, cars had been mainly available in two models in India: the unglamorous, onion-shaped, sturdy Ambassador and the more aerodynamic Maruti 800. Both were produced by state-run companies (though the latter had a partnership with the Japanese company Suzuki). But when India began to open its markets, a wide range of cars became available, just as rising middle-class incomes and cheap consumer credit made buying such cars feasible.

In many ways, the marriage between the Indian middle class and the automobile culture has been disastrous. Roads remain awful, drivers continue to be erratic, and traffic in cities like Delhi and Bangalore is worse than ever. And yet the car has become deeply enmeshed with upward mobility, while also complicating that mobility. In the India of the Ambassador and the Maruti, the distinction was largely between those who owned cars and those who did not. In the India of Ford, Fiat, Hyundai and Mahindra — where there is even a very cheap indigenous model called the Tata Nano — distinctions are parsed in terms of the model one owns.

Drom the Bollywood producer’s suit-matched Bentley Continental to a struggling middle class couple’s divorce over the wife’s aspirations to a red Mitsubishi Pajero, Deb documents the cars, and other forms of transportation, which help define the emerging class order in India. It’s a brief but intriguing glimpse into the social impact of cars in a rapidly-growing economy, and it illustrates how cars both affect and reflect the fabric of social order. Give the whole thing a read if you’ve got a spare minute.

[Editor's note: I want to be clear that, despite the unconventional, somewhat light-hearted tone of this post, the editors of TTAC take the right to drive very seriously. Sometimes, however, the absurdity of injustice can only be captured with more absurdity]

Najalaa Harriri lives in a sad little world where women are still forced to dress like Halloween ghosts. Besides spending a miserable lifetime as someone else’s property, Ms. Harriri was sentenced to ten lashes for the ultimate sin of driving an automobile in Saudi Arabia (the sentence has since been suspended by the king). I have to wonder about this. Was it a Yugo? A souped up Corolla that did powerslides? A car imported from Zionist occupiers who still give Muslims more rights than the Saudi monarchy?

No to all the above.

She was just driving. A car. A machine that offers freedom in ways that infuriate ass sitting mullahs who have nothing better to do than to rarely shower and treat women like obedient sex objects.

On the brighter side of life though,  at least she won’t have to worry about getting stoned.

The prospect of a Chinese auto industry growing at insane speed thanks to a booming market and resiliently low wages has long kept auto industry execs up at night, most notably inspiring Sergio Marchionne’s acquisition of Chrysler. But basic economic principles dictate that you can have a high rate of growth or low wages… but not both. Growth inevitably drives inflation, which drives up wages, which in turn slows growth. And according to a report in the Wall Street Journal [sub], that dynamic is already taking hold.

Jae-Man Noh, head of Hyundai’s joint-venture operations in China, said average manufacturing-worker wages in China—about 27,000 yuan ($4,200) a year per worker in 2009—are likely to double by 2015 from current levels.

Auto makers are expected to be affected as much as other industries by the trend, if not more, Mr. Noh said, adding that wage costs for many foreign auto manufacturers already have doubled in less than a decade. He said that a rival foreign auto maker that Hyundai has researched has seen worker wages in China rise to 49,000 yuan a year per worker in 2010, up from 24,500 yuan a year in 2003.

“We need to let go of our perception that the Chinese market is a low-cost production base,” Mr. Noh told a group of reporters at Hyundai’s office in Beijing. He didn’t offer specifics on Hyundai’s wage costs in China.

The BBC’s China editor Shirong Chen says the government has tolerated strikes at foreign-owned plants, which are obliged to respect workers’ rights, but maintains strict control at Chinese-owned factories for fear of widespread social unrest.

But for foreign firms, the protest must have seemed like “widespread unrest.” As LaborNotes documents, in an in-depth study of the strike wave

the events at Honda Nanhai triggered a chain reaction among workers in auto supply and electronics factories throughout the Pearl River Delta. According to the Guangzhou Federation of Trade Unions, more than 100 strikes occurred, of which only a small number were reported in the media. Around Toyota’s ultramodern factory in Guangzhou Nansha, eight of 14 core suppliers had labor conflicts. And action spread to other areas: workers in several electronics factories near Shanghai and at a Toyota supplier in Tianjin struck for several days.

The strike movement not only scared multinational corporations in China, it challenged the system of labor control. Typically, tacit coalitions between capitalists and local government rule over conditions inside the factories. Unions play a role in former state-owned enterprises and flagship joint ventures, but not in most private companies. Often, local governments back up violations of labor law by major investors, as has been documented in many cases for suppliers to multinationals such as Wal-Mart, Apple, and Nike.

But under conditions of rapid growth and highly modern production, the methods of control have become ineffective. Hundreds of labor conflicts occurred in the wake of the global economic crisis, affecting millions of Chinese workers in 2008 and 2009. Following the recovery, workers are seeking a voice. Workers’ wages have been falling continuously as a share of China’s national income since the 1990s, when the shift toward capitalism really took off, and the government is now officially calling for higher wages in order to raise domestic demand.

If underlying economic fundamentals have been pushing China towards wage inflation for some time, the dam broke in last summer’s wave of strikes. Now Hyundai is publicly acknowledging the reality that every foreign auto firm must face: low costs alone aren’t reason enough to be in China. But as the WSJ notes, even though the glory days of cheap Chinese labor may be over, Hyundai (and others) still have plenty of incentive to stick with their Chinese market plans.

China still offers other draws, including strong economic growth, an increasingly affluent population and a quickly growing car culture.

Plus, Hyundai’s average factory labor cost in China is still one-fifth of that in South Korea, Mr. Noh said. What concerns him most is the dramatic rate of increase, he said.

This trend is “inevitable” as the Chinese economy grows and society improves, Mr. Noh said.

Despite rising labor costs, China’s auto exports will continue to increase in part because of excess auto-production capacity in the country, he said. China’s central government will also continue to focus on automotive exports, he said.

The growth of the Chinese car market in recent years has been nothing short of freakish, and was overdue for this kind of correction. But even though costs are increasing, China’s continued growth and still-low costs relative to other manufacturing centers continue to make it an attractive target. Foreign firms just have to work a little harder than they used to, and as Chinese wages rise, workers there and around the world will only benefit from a narrowing assembly cost gap.