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David Cole: Ford’s Debt Adds $1500 to Cost of Every Vehicle

By Robert Farago
November 6th, 2009

We tore David Cole a new one the other day, when the leader of the manufacturer and union-supported Center for Automotive Research suggested that trimming GM and Chrysler dealers wasn’t such a good idea—based on some schmoozing with his pals. Never let it be said that I won’t trot-out a dubious source when it suits my editorial needs, especially when it comes to bashing Ford. Just kidding. I love Ford. My first three cars were Fords. I want Ford to succeed. I am not, however, blind to the fact that Uncle Sam shoveled $10 billion worth of no-to-low-interest twenty-five year loans in FoMoCo’s direction. Nor am I Detroit News columnist Daniel Howes; I will not predict sunshine and roses simply because there’s a government-sponsored break in the clouds hanging over the Glass House Gang. TTAC commentator Mark MacInnis shares my skepticism, with a nod to Mr. Cole . . .

Amidst all the hoopla yesterday about Ford’s quarterly profit, was this little nugget, which doesn’t bode well for their future. “‘That puts Ford at a competitive disadvantage,’ said David Cole, chairman of the Center for Automotive Research in Ann Arbor, who estimated that servicing Ford’s debt adds more than $1,500 to the cost of every vehicle the automaker sells in the United States.” Now, Ford sells as many or more cars worldwide as they do in the U.S., so the cost advantage per-vehicle is actually less than this hyped number. But it’s still what? A six percent or seven percent cost dis-advantage? That’s BEFORE the labor costs, which are higher than GM since the UAW repudiation of Ford’s contract do-over. And higher than Toyota’s and Honda’s. Still. So, add it up, and Henry’s company has to build vehicles ten percent more efficiently or ten percent more desirable to overcome that debt-related disadvantage. A formidable task. So, before we all start congratulating Ford on dodging the bullet, we better watch out for that ricochet . . .

Posted in High Finance | News Blog | 23 comments

What’s Wrong With This Picture: The Old Ennui Edition

By Robert Farago
November 6th, 2009

So what about this, then? Or this? I guess some brands are meant to be broken.

Posted in 3WTP | News Blog | 11 comments

Hammer Time: Chrysler’s Retro Halo

By Steven Lang
November 6th, 2009

It’s heartbreaking. To see a major company that literally carried a healthy portion of America’s heartland go up in Euro-flames. I remember the beauty of it. The 1990’s minivans that completely obliterated their competition. LH sedans that were state of the art for their time. Cloud cars that had more power and road feel than their American brethren. Neons that were so good that even Toyota was jealous. Believe it or not, I still think the talent base of Chrysler is there. But to get it out…
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Posted in Hammer Time | News Blog | 53 comments

Made in China Saab 9-5?

By Bertel Schmitt
November 6th, 2009

If the GM-SAAB-Koenigsegg-BAIC deal ever closes, Beijing Auto (BAIC) would be interested in taking the current generation Saab 9-5 and produce it in China once the 2010 Saab 9-5 is launched in Europe in April next year, Chinese media reports via Gasgoo.
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Posted in China | News Blog | 13 comments

Opel: Germany Definitely Wants Its Money Back

By Bertel Schmitt
November 6th, 2009

What happened two days after GM blindsided most of Europe, including Russia, with their decision not to sell Opel after all? As announced the next day, Opel workers in Germany laid down their tools today. Tomorrow, workers in Opel plants in the rest of Europe will follow.

Yesterday night, German Chancellor Angela Merkel picked up the phone, called her colleague Barak Obama and voiced her displeasure. “Obama said he had not been involved in the surprise decision by the GM board,” Reuters reports. Isn’t Teflon wonderful? Angela told Barak that his state-owned company better pay back the balance of the bridge loan by the end of the month. She even dispatched her very own collection agent to DC.
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Posted in Germany | News Blog | 34 comments

Hummer To China: Same Player Shoots Again

By Bertel Schmitt
November 6th, 2009

With all the noise about GM’s interruptus of the Opel sale, we could forget that there is a brand GM wants to sell, badly: Hummer. Since June  it had been announced that the sale of Hummer to little-known Tengzhong in China is as good as done. Except that it wasn’t.

Still ain’t.
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Posted in China | News Blog | 5 comments

Chevy Branding Blanks Out

By Robert Farago
November 5th, 2009

As you can see from this screen cap of Chevrolet’s website, the brand’s American Revolution is no more. The ridiculous catchphrase—applied as it was to Korean, Canadian and Mexican imports—has been replaced with . . . nothing. Niente. Nada. The big goose egg. Oh sure, there’s the “May the Best Car Win” tag line lurking beneath the fold, but that’s equally ridiculous. The best car is winning—in the only metric that means anything (sales), and it doesn’t have a bow tie on its snout. Yes, yes, it suits the suits. Just ask the guys and gals who attend GM’s death-by-PowerPoint marketing meetings, where execs who don’t mind the perception gap face . . . nothing. Niente. Nada. (Fritz will get around to the cultural change thing eventually.) Anyway, what’s next?

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Posted in Branding | News Blog | 41 comments

GM CEO Fritz “Transparency” Henderson: We’re Beating Secret Targets

By Robert Farago
November 5th, 2009

Transparency. It’s what GM CEO Fritz Henderson promised taxpayers in sworn testimony in front of Congress, post $52 billion bailout (and the rest). As TTAC pointed out previously, bullshit. After not releasing the dead dealer list promised to Senator Jay Rockefeller, the nationalized automaker is now proud to announce that it’s beating its targets—without revealing the targets. “General Motor Corp. is outperforming the targets set in its earnings viability plan outlined in April, CEO Fritz Henderson said today,” Automotive News [sub] said today. “Henderson declined to list the areas in which GM is outperforming but said the company would provide details in its third-quarter earnings report later this month. ‘I’m not going to get into whether we’re generating cash or not generating cash, but I would certainly say the situation is more stable than what the outlook was even just two months ago.’” And why should we believe His Opaqueness?

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Posted in Chapter 11 | News Blog | 19 comments

Sergio’s Plea For Optimism

By Edward Niedermeyer
November 5th, 2009

There are plenty of reasons to believe that Chrysler will not survive, let alone thrive the way the firm’s five-year plan foresees, but one of them does not appear to be Sergio Marchionne’s leadership. Though there’s doubtless a good deal of hubris in his plan, Marchionne’s depth of knowledge, personal experience and legendary workaholism seem to indicate that, if nothing else, Chrysler’s leadership is lightyears away from the Bob Nardelli years. Considering he oversaw a turnaround of Fiat that was only slightly less improbable than his current turnaround mission, he’s about as qualified to take on the mess in Auburn Hills as anyone else. Here are his closing remarks from the seven-hour product and business plan event.

Posted in Industry | News Blog | People | 20 comments

Hybrid and VW Diesel Sales Analysis: Prius Outsells Insight 8 to 1, Jetta TDI 4 to 1

By Paul Niedermeyer
November 5th, 2009

Hybrid sales in October outpaced the market, increasing 11.4% over October 2008. The heavy lifter as usual, was Toyota, up 15%; Toyota’s hybrids now represent 77% of the total US hybrid market, which is 2.9% of the total market. The Prius continues to dominate the whole hybrid sector, with a 55% market share, and sales of 13,496 units. Prius outsold the Honda Insight by an 8 to 1 margin. (more…)

Posted in News Blog | Sales | 54 comments

Chrysler: The Powertrain Plans

By Edward Niedermeyer
November 5th, 2009

One of Chrysler’s major problems in the powertrain department is a mass of V6 engines of varying ages and displacements. The lack of interchangeability between engines contributes to Chrysler’s unprofitability, and the advanced age of some hurts overall fuel efficiency considerably. The debut of a brand-new Pentastar V6, arriving with next year’s Grand Cherokee, will change all that. The 280 hp, 260 lb-ft engine will replace all of Chrysler’s V6s, and handily gives Fiat their only modern V6. Single and twin-turbo versions are being considered. Meanwhile V8s aren’t going away, with 5.7 and 6.4 liter versions planned.

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Posted in Diesel | Fuel Economy | News Blog | Technology | 25 comments

The Real Deal: Never Knowingly Undermisrepresented

By John Clay Wolfe
November 5th, 2009

I just drove by a Tractor Supply Store. The owner festooned the store with a huge banner: “NEVER UNDERSOLD.” In certain states, the price claim must include the word “knowingly.” Which is another way of saying “We say we’ve got the lowest price but it’s your job to find out. If YOU can show us a lower price for an item, we’ll reduce our price to match it. Oh, do you have a written price quote? And you do realize that you’re not comparing apples to apples here. Our price includes our personal guarantee and . . . ” When it comes to this kind of malodorous marketing, car dealers rule. Here are some other examples.

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Posted in News Blog | Sales | 17 comments

Ask the Best and Brightest: Why Is the Ford Taurus Selling So Well?

By Robert Farago
November 5th, 2009

“Consumers increasingly are noticing that the Ford difference is our great products, our strong business and our leadership in quality, fuel efficiency, safety, smart technologies and value.” So sayeth Ken Czubay, Ford’s vice president of U.S. marketing sales and service. Am I reading too much into it, or is “strong business” a euphemism for non-teat-suckler? Anyway, the spin is the spin, and the facts are the facts. The Blue Oval Boyz report that sales of the new Ford Taurus rose a staggering 141 percent, from last October’s 2517 to this October’s 6076. A big ass one-month jump does not a runaway best-seller make. And these numbers aren’t all that spectacular for a mainstream automaker (especially compared to the original Taurus). But you can’t take that away from them. Or can you? What’s going on here? My guess: Ford’s getting a big lift from GM and Chrysler defectors. Or maybe the Taurus has simply hit the sweet spot, as SUVs continue to fall out of fashion. Fleet sales (hidden as retail, as Ford/Mazda is wont to do) may have a little something to do with it. Could be all three. What’s your take?

Posted in Ask the Best and Brightest | News Blog | 112 comments

Stimulated Toyota Posts Unexpected 2Q Profit, Lower Annual Loss; Denies Floor Mat Cover-up

By Paul Niedermeyer
November 5th, 2009

Thanks largely to stimulus programs in the US and Europe, Toyota announced that it has eked out an operating profit of 58 billion yen instead of the average estimated loss of 63 billion yen from five analysts. Toyota now is forecasting a lower operating loss of 350 billion yen ($3.9 billion) for the year through March 31, and is presumably on track to a profitable following year. But with the stimulus programs’ end, Toyota continues to hunt desperately for cost savings, like its recently announced elimination of the F1 program, which cost a tidy $300 million per year. (more…)

Posted in Industry | News Blog | Safety | 8 comments

California Toll Road: Penalties Were Unconstitutional

By Robert Farago
November 5th, 2009

California motorists hit with massive fines for minor, alleged toll infractions won a settlement last month from the Orange County Transportation Agency (OCTA) and Transportation Corridor Agency (TCA). The toll road operating entities agreed to pay $1.4 million in restitution and waive $41 million in unpaid toll penalties after admitting the fines were “excessive” and that the denial of due process to the accused was “unconstitutional.” Over a dozen motorists sued in 2007 claiming that fines of up to $123,000 for skipping tolls were outrageous. In several cases, such as that of Stephanie and Brian Young, the violations were inadvertent. The couple racked up $580 in unpaid tolls in 2003 after the credit card linked to their toll transponder account expired. For this mistake, OCTA demanded that they pay $53,550 in fines. Similarly, Maria and Pablo Gonzalez allegedly failed to pay $60.14 in tolls and were billed $78,780.

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Posted in Crime & Punishment | News Blog | 17 comments