GM claims to be calibrated to break even at a Seasonally Adjusted Annual sales Rate (SAAR) of 10m sales. Which assumes that GM’s portion of those sales will remain steady. As we’ve learned today, that’s not likely. GM’s market share is being pummelled by bad news, bailout backlash, and (according to the Merrill Lynch report) poor product replacement rates. While GM talks up the Volt, discusses a Prius fighter and touts an American-made compact, its major product push has been centered around a single dying brand (Buick) and its single new product, the LaCrosse. Yes there’s a new Equinox, but has anyone noticed? Camaro may be the choice of bold, audacious lemmings everywhere, but for how long? It’s gut check time . . .
$8.2m it turns out (yes, sins of omission count). Which is almost as much as the wages of investing in a fraudulent cellulosic ethanol firm. But what about Fritz, Lutz, LaNeve and the rest of the gang that couldn’t shoot straight? If Wagoner gets nearly $10m for overseeing consistent declines in sales and market share, and after being canned for the good of the nation, where’s the motivation for the old, new crowd? Ditto for the cellulosic ethanol industry, if Cello’s fraud leads to increased subsidies to get the Renewable Fuel Mandate back on track. Forget peak oil, it seems we’ve reached peak common sense. A while ago. Now, back to the cars.
“People don’t want cars named after hungry old Greek broads! They want names like ‘Mustang’ and ‘Cheetah’ — vicious animal names,” according to Homer Simpson’s automaker brother Herb. Yesterday I learned another good rule of thumb for car naming: if it doesn’t sound hilarious with the word “anal” in front of it, it’s probably not a great car name. Think about it… Commander, Wrangler and Legacy good; CTS, MKT and Optima bad. It may not be safe-for-work, but dammit it’s the truth.
This weekend’s announcement that “Maximum” Bob Lutz will stay on at GM is the biggest blow to GM’s re:invention PR since Fritz Henderson was handed the helm by Rick Wagoner. In essence, Lutz’s “unretirement” sends the very same message Wagoner once repeated ad nauseum: GM’s turnaround would be going well if it weren’t for that darn economy. And, of course, nothing could be further from the truth. Lutz arrived at GM in 2001 with a single thesis: excitement could turn the General around. Eight years later, and the results speak for themselves. Despite injecting Pontiac with its best products in decades, Lutz couldn’t even save GM’s “excitement brand.” Though Lutz created the Malibu to add his aesthetic appeal to GM’s long-ignored mid-sized offerings, the car only excited automotive journalists. Consumers preferred the plain-jane Impala. Ultimately, Lutz proves exactly how little GM has changed. His old-school, hard-charging pursuit of glamor, performance and excitement are little more than a fading afterglow from the good old days of Motorama excess. The market has moved on, but GM hasn’t.
Ex-Car Czar Bob Lutz has made the jump to hyperspace, joining New GM as . . . Car Czar. Of course, Bob can’t quite leave the Old School behind. More specifically, in keeping with CEO Fritz Henderson’s obsession with speed, he’s pre-pared excuses for failure on the forecourt. “There will have to be some form of economic recovery before any automobile company can hope to be profitable,” Lutz tells NPR. Perception gap much? Of course. All things considered, where’s the reinvention here?
Why is Chrysler’s new board chock full of former airline men and the governmentally well-connected? Because auto firm experience isn’t necessary for these things. Just ask Chrysler’s former owners Cerberus. Or, for another perspective, ask United Airlines employees about their experience with employee ownership. Meanwhile, the Aveo still sucks and the SL65 Black Series is still bat-shit loco. Plus, we’re working on getting our sales data in a more universal format.
Because it wants to, Buick is headed upmarket. Because it has to, Cadillac is headed downmarket. Who wins? Not GM. An Epsilon II, FWD/AWD Cadillac isn’t going to have the phrase “standard of the world” tripping off anyone’s tongue. And since GM exists at the pleasure of the politicians, it doesn’t seem likely that Cadillac will ever get around to making the huge investments in opulence that it would need to regain its former glory. And besides an aging CTS and a “2005 called and wants its SUV back” Escalade, what is Cadillac again? Some days it’s a good day to die. Some days it’s a good day to record a podcast.
Yes, it’s a palindrome. No, it’s not my favorite. (Do geese see God?) But as a history buff—as in that’ll buff right out—I’ve always considered this palindrome something of a prose poem. The Panama Canal was certainly not the vision of one man. In 1534, Charles V of Spain contemplated a man-made waterway between the Atlantic and Pacific oceans. In 1880, after completing the Suez Canal, French Vicomte Ferdinand de Lessepss rose to the challenge. Nine years later, disease (amongst other things) put paid to the entire engineering endeavor. American President Theodore Roosevelt picked-up the cudgel. Crucially, the plan in question eventually changed from a sea level passage to a system of dams and locks. The Canal opened on August 15, 1914. As for Panama, it received control of the Canal in 1977. So what does this tell us about the U.S. car industry? The simplest ideas may be the greatest, but all great ideas take time; and time is money. What’s so great about rebuilding GM, and do we really have the time to do it?
Somewhere in the background, a White House spinmeister is busy telling the cross-dressing Fox News anchor (if he doesn’t, he should) that his viewers should chill about the $3.6 trillion deficit generated by her boss’ budget. “The average taxpayer knows that this is an investment in America that will reinvigorate the economy and, thus, generate new tax revenues and hey, presto! It will make itself disappear!” Or some such crap. The average person knows his or her government is out of control. They are also increasingly aware that GM is doomed. As I stated in last General Motors Death Watch, as the enormity of this collapse reveals itself (-$3,529,166.67 per hour) the American taxpayer will draw a line in the metaphorical sand. In fact, the coming tussle over the Detroit bailout could be the beginning of the end of Bailout Nation. We shall see. Meanwhile, lightly used Ford GTs are selling for $130K, a 2000 Ferrari 360 is going for $90K and today’s Maserati GranTurismo (or a Quattroporte) can be had for less than $100K. At the low end, prices are also slip sliding away. And yet, it’s still not time to buy. How scary is that?
Now that Chrysler and GM have submitted their “viability plans,” the Congressional corridors of power have been eerily silent on the subject. Oh sure, the White House Press secretary said something patriotic about preserving this, that and the other thing. And the presidential clusterfuck committee charged with sorting this shit out is meeting even as I obscene. But I was expecteding a lot more public political positioning on Motown’s second round of trough snuffling. Never mind. I reckon Chrysler and GM will get their/our money and soldier on. I also predict the feds will direct Cerberus to toss the keys to Chrysler to GM. Political expediency—the need not to “throw in the towel” on any aspect of the U.S. economy—makes ChryCo inviolate. So why not lump all of Detroit’s “troubled assets” together and create a federally controlled—sorry, “supervised” American Leyland? It’s such a horrendous idea on so many levels it just has to happen. Or not. What say you?
I hopped in my Boxster and headed to the Lexus dealer yesterday. We’d agreed on a price for their ’08 2k mile IS-F. Only a single hurdle remained: Mrs. Farago. Sam thinks I’m nuts to swap a Porsche anything for a Lexus anything. There was only one way to convince my live-in lead-footed badge snob that the IS-F is the right kinda wrong: a test drive. Sam couldn’t get out of the house. Hakuna mutata. I’ll just swing by the dealer, pick-up the car, drive it back home, let her drive it, drive it back, pay my deposit and tidy-up the details. I called the salesman to give him a quick heads-up. [NB: the same salesman who was pressuring me to get the deal done by President's Day for HIS convenience.] Nope. No can do. He was slammed. Huh? Just throw me the keys. After all, they’d lent me the über-LS. Sorry. Tomorrow or Wednesday. [Insert silence while I waited for his offer to bring the car by the house.] OK. How about . . . never? Over and out. I know this will strike a chord with many of you. I’ve heard plenty of stories where car dealers pissed on pistonheads, operating from the mistaken belief that THEY’RE doing YOU a favor selling you a car. And that’s another reason automakers and their dealers should be “allowed” to go out of business. If there’s no downside for someone selling cars, there’s no upside for the people who buy them. It’s as simple as that.
My step-daughter Sasha and I had a little chin-wag this morning. After debating my potential car “needs” with her in private, it struck me that TTAC’s Best and Brightest might want to hear an 11-year-old’s perspective on high end automobiles. As egghead pistonheads, we often forget the basic appeal of our wheels, and how people outside the autoblogosphere view the apples of our collective eye. So I present my interview with Sash, and invite you to share your progeny’s thoughts about cars in general, your cars in particular and dream machines. [NB: I know the Estoque doesn't have scissor doors. More's the pity.]