The Truth About Cars » Editorials The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Tue, 29 Jul 2014 15:51:04 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » Editorials Editorial: Tesla is What Scion Should Have Been Tue, 08 Jul 2014 14:52:13 +0000 photo_tenant_tesla


It’s not an exceptionally large showroom, but the façade is enormous. The Tesla retail store in Columbus, Ohio wraps around an entire corner of the Easton Town Center, that city’s premier upscale shopping venue. My trip to the store, the first time I’d ever set foot in a Tesla retail location, was an eye opener. Tesla’s retail model is an example of what Scion could have (and should have) been.

Tesla’s presence at Easton is inextricably interwoven with the history of American retailing. Easton is the brainchild of L Brands founder and CEO Les Wexner, who has overseen the growth of some of the country’s biggest names in retail: Victoria’s Secret, Abercrombie and Fitch, Bath and Body Works, Lane Bryant, and many others. Easton opened for business in 1999, as part of the new wave of American retail venues that appeared in the late 90s and early 00s. These were indoor-outdoor hybrids, replete with restaurants, entertainment venues, and other “lifestyle” amenities. Consumer response to these new options was strong, and today Easton is still one of the state’s most successful retail development projects.

Easton’s rise was directly linked to the decline of traditional malls. Northland, Eastland, and Westland were opened in the 60s to serve customers in and around the Columbus metro area. Of the three, only Eastland is still in operation, and it’s currently for sale. De-urbanization and the general decline of Columbus’ old neighborhoods near the city’s core hurt these malls, but they were also undermined by changing customer expectations. When Easton opened (as well as the copycat Polaris Fashion Place developed by the rival Glimcher development group), it suddenly made the indoor malls seem like relics of a bygone era. Easton had anchor department stores like Macy’s, a movie theater, some indoor small shops, and other features that traditional mall customers expected. But it also had bars, quality restaurants, a children’s park, and even a luxury grocery store. It also had a myriad number of high-end standalone retailers that were previously only to be found in exclusive locations in big cities: Lacoste, Tiffany’s, Louis Vuitton, Coach, and many others.

Eastland and the other traditional malls didn’t need these kinds of retailers to satisfy the basic demands of their traditional customers. But what the luxury brands did was give Easton a halo of respectability and posh refinement that itself was an object of consumer desire. Although there are plenty of rich people who shop at Easton, a $2500 handbag is well out of reach for most people who go to the mall. What Easton does is give the plebs the chance to rub shoulders with the moneyed set before sneaking into Macy’s to buy a $40 dress. Wexner’s decision to arrange most of the high-end stores along a single boulevard lined with metered parking was a stroke of genius. Every day the main thoroughfare is flanked by an ever-changing lineup of Benzes, BMWs, Porsches, and exotics. The other malls withered, and then crumbled. Northland Mall, just a few miles up the road, was torn down in 2004.

Now, Easton has a store that sells electric cars. It would be tempting to say that this store is unlike any that have come before it, but that isn’t really true. There’s a Model S in the middle, of course, as well as bodiless chassis buck. Otherwise, the Tesla location looks a lot like the other high-end retailers ringing Easton’s perimeter. Soothing but distinctly modern Muzak plays through the ceiling, and everything is brilliantly lit and tastefully furnished. There are a variety of slick technical displays explaining various features of the car, as well as options.

Most importantly, the walls are covered with logo merchandise of every type, shape, and description: t-shirts, coffee mugs, tin lunchboxes, baby onesies. All of this is overseen by Tesla personnel, in this case two young men. They were as fastidiously dressed and groomed as any Brooks Brothers employee, and had the manners of a really good sommelier at a high end restaurant: polite, unquestionably confident, and just easygoing enough to talk you into making a really expensive decision. Or, if you want to buy a $25 shirt, they’d be more than happy to help you with that too. What the Tesla location resembles is not so much a car dealership as the Puma store it replaced: a variety of premium branded goods, sold by handsome young people in a clean and upbeat atmosphere.

Contrast that with my last visit to a Scion daler, which was pretty representative of all the Scion dealers I’ve ever set foot in. The Scion display was in the corner of a much larger Toyota showroom, which was itself part of a large dealer group. It was constructed in the manner of virtually all large car dealers: a bunch of lots and showrooms in their own area, distinct from other retail outlets. The Scion display consisted of a single panel, which was filled with informational pamphlets. Half of these were for products that either no longer exist or are in some kind of planning limbo.

The other half were for the kind of cashback deals and financial incentives that can be found in any dealership anywhere. The only Scion in the showroom was an automatic xD, which was dusty and fingermarked. I fooled around with it for a good twenty minutes without anyone bothering me. I had a salesman on hand about thirty seconds after I started examining the new Corolla. There was some Scion logo merchandise, but it was in the parts department alongside all the overpriced windshield wiper blades and camo pattern trailer hitch covers. There was nothing that jumped out as edgy, different, or alternative. Certainly, there was nothing to make you think you were anywhere but a car dealer.

It was pretty clear that nobody much cared about the Scion side of the dealership, and why should they? People don’t come to Toyota dealers looking for Scions, they come looking for Toyotas. Scion will never be much more than a distraction for the salespeople, who are much more invested in selling Camrys, Corollas, Rav-4s and Tundras. At this point, most Scion sales are either to the limited number of enthusiasts buying FR-S’s, or people who were disappointed to find out that the Corolla doesn’t come in hatchback form anymore and decided to settle for something else instead. Scion urgently needs new product, but it also needs a complete overhaul of the buying experience. The traditional dealership format is completely inimical to accomplishing the stated goals of the Scion brand: attracting a younger clientele to Toyota products, while modifying the traditional dealer experience.

The history of retail is a stream of constant reinvention. Every generation has contributed some important innovation to the backbone of the consumer economy. Online shopping is perhaps the most relevant current example of this trend, but brick-and-mortar stores have been reinventing themselves too. Walmart wiped out many smaller grocery chains, as well as traditional department stores. But it failed to steamroller the entire grocery market because it became synonymous with lower-end retail. Publix, Target, Kroger, and other chains have hung on by offering a more pleasant shopping experience and a better selection of higher-end goods.

Similarly, Easton represents a way of reinventing retail to better serve the needs of a modern, affluent clientele. Tesla, with its direct sales model and glimmer of luxury branding, represents a perfect fit for Easton’s retail model. It’s a brick-and-mortar store, but one with a distinctly modern feel. And although its main product is out of reach for the majority of Easton’s customer base, it still offers other ways to capture some of that Tesla magic. The Tesla showroom is a constant parade of gawkers, most of whom come away distinctly impressed by what they’ve seen. This is ground zero for building a brand, and Tesla is hitting it out of the ballpark. Why can’t Toyota emulate this model for Scion?

The answer, of course, is that Toyota isn’t in any position to disrupt the market in such a way. They are firmly a part of the American automotive Establishment, just as much as any of the Big Three. Their franchise dealers are their lifeblood, and are responsible for much of their American success. Setting Scion up as a direct sales operation would have required throwing these dealers under the bus, as well as a massive legal campaign with no guarantee of success. In short, it would be an incredibly foolhardy move, and it’s no surprise that Toyota eschewed it in favor of following the established model. This meant, though, that Toyota missed the opportunity to do something really revolutionary with the brand, or at least make it seem revolutionary.

When GM launched Saturn, there was nothing on paper that made the dealership model seem any different from previous ventures. However, the focus on customer service and satisfaction was such a revelation that even import brands were caught off guard. Toyota didn’t try to shake up the dealer experience with Scion, besides some milquetoast moves towards customization and fixed pricing. Instead, Scion was just another car brand from the get-go. The unapologetic functionality of the first generation xB, and the promise of an Eclipse with Toyota reliability undergirding the tC, were enough to pull in a decent number of early adopters. After that, the brand languished. Scion didn’t damage Toyota’s fortunes, because the product wasn’t shoddy or defective (for the most part). The brand underperformed, however, because it did not deviate from the norm of American auto sales in any meaningful way. For a brand supposed to be based on youthful rebellion and nonconformity, that was the kiss of death.

It may be too late now to salvage the Scion brand. And if Toyota decides to pull the plug on the FR-S at the end of this generation, it may be that the company won’t keep Scion around anyway. Even so, I believe I have a workable proposal for reversing Scion’s fortunes, at least on the marketing front. Take some of the money that’s being wasted on FR-S TV commercials and use it to open some storefront locations in prime shopping areas.

Let these be places where potential customers can get a feel for the product in a non-traditional setting. Put two or three cars in the showroom, and let a few employees explain their features and options. Give customers the opportunity for a test drive, if that’s workable in a given location. When somebody wants to buy, use the power of that newfangled Internet thing to match customers up with locally available inventory. In short, keep Scion customers out of the arms of dealers until the last possible moment. Use the stores as merchandising fronts for the Scion AV music venture. Be like Tesla, and offer copious merchandising opportunities all along the way. If you’re serious about turning Scion into a “movement,” then provide the means for that to happen. Dealers and a few sponsored events aren’t going to do it for you. Keep the franchisees around for their service and sales infrastructure, but don’t rely on them to market Scion for you. You don’t need to sell six-figure electric cars to create buzz. You just need some good product, presented in a relevant and novel fashion. That alone will buy you a lot of credit with the disaffected youth of today’s marketplace.

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Coming of Age in the BOF Era Sat, 24 May 2014 13:00:56 +0000 DSCN2839 - Copy

Standing on the sidewalk in front of his house, a young boy watches his neighbor across the street back out of her driveway. Her moss green Expedition starts to roll backwards. Suddenly, a blue beach ball blows into the SUV’s path. She hits it with one of her rear tires, and the truck rises up on top of it for just a moment. The ball bursts with an enormous bang, and the truck crashes back to the pavement with an equally loud noise. The top-heavy rig sways back and forth as the boy laughs.

That young boy was me, sometime over a decade ago. The moss green Expedition was hardly the only SUV on the block. Our own family had two, at various points in time. The first was a second-gen two-door S-10 Jimmy that we assumed the lease on after my grandfather passed away suddenly. The second was another Jimmy, this time a four-door in dark green. The parents didn’t keep either of them for long. The two-door wasn’t very practical, and of course had to be returned at the end of the lease anyway. My mother hated the swinging rear spare configuration because it was difficult for her to lock securely; one time the latch came loose on a freeway exit ramp, and the tire swung out crazily on the swivel mount. The four-door was more practical, but a maddening front-end squeak that was never quite fixed led them to trade it in on a new Mustang. It was the last GM product my family owned.

For us Millennials, the SUV defined the automotive era in which we grew up. Consider that the first Ford Explorer, the most paradigmatic SUV of the entire boom, rolled into showrooms in 1990. The Explorer was mostly just a softer clone of the unibody XJ Cherokee, with fewer off-road chops and less sophisticated engineering. It didn’t matter- the Explorer went on to become one of the greatest sales successes of the 90s, despite the notorious rollover scandals. The Explorer inspired yet more imitators, and the passenger vehicle market has never been the same since. A multitude of causes have been cited to explain the SUV boom: historically low gas prices, a booming economy, a resurgence of interest in outdoor leisure activities, tax write-offs, and regulatory loopholes. In terms of the Millennials and their relationship to the automobile, arguments about what caused the SUV boom are less important than the mere fact of its existence. The rise, fall, and partial rebirth of the SUV made a powerful impression on the automotive consciousness of the Millennials. The negative externalities of the BOF Era (a period I’ll define as the years between the introduction of the Explorer in 1990 and the collapse of the world economy in 2007) are at least partly responsible for the ambivalent, occasionally hostile attitude of many Millennials towards the automobile.

SUVs became a ubiquitous sight on the roads as Millennials were growing up, but their conquest of America’s driveways and garages was never total. Low gas prices made it feasible for more middle-class people to operate them as regular-use vehicles, but they were never particularly cheap to buy. In 2000, the Explorer hit its all-time sales peak of 445,157 units, although Ford managed to shift more than 400,000 units in all but two years between 1995 and 2002. At that time, the very cheapest four door, two-wheel-drive model was still over $23,000- close to $32,000 in today’s money. In reality, most models were nudging thirty grand in year 2000 dollars by the time all the paperwork was signed. The bigger Expedition and Excursion were more expensive still.

In hindsight we now know that there was some pretty hair-raising over-leveraging of credit that went on in the first decade of the 2000s. Even so, not everyone could afford an SUV, and they became an unavoidable distinction between haves and have-nots. They introduced a classist element to the American roadways that differed from the old brand hierarchy. That made a deep impression on myself, as well as many of my friends. We were getting old enough to start understanding the basic tenets of American consumerism. Things cost money, and people made money by working. If you had more money, you could buy more things. In the context of our economic times, this had two important manifestations. Wealthy people drove SUVs and lived in large houses; poor people had sedans (or nothing at all) and lived in apartments or bungalows. The childish mind doesn’t understand that size isn’t always a virtue; nor, it turns out, did many adults.

The logic of the SUV boom was wildly simpler than in the supposed salad days of the Sloanist brand hierarchy in the 50s and 60s. It’s debatable to what extent that brand hierarchy ever penetrated the public consciousness in the manner imagined by automotive historians, anyway. The “buyers’ strike” of 1957, the failure of Edsel, the backlash of the nascent independent consumer press against the excesses of Detroit, the overwhelming dominance of “low cost” brands even during times of rising affluence, and the early success of the Volkswagen Beetle and its imitators are all challenges to the old story. The point remains that drivers who were uneducated about brands, or who didn’t care about cars in general, could easily fail to be impressed. The 1957 Chevrolet looked a lot like the 1957 Cadillac, and this was still true two decades later. If you didn’t pay attention to the brand, the conspicuous consumption aspect was lost on you. That’s how all pure, tiered branding works, right? You have to convince the consumer of his position in the brand hierarchy; but you also have to impress everyone else with the strength of the brand.  The non-purchasers of your product are the ones that make the act of conspicuous consumption truly possible. They are the ones that provide the admiration (or envy) that makes the whole system turn.

The marketing genius of the SUV was that it radically simplified the display of wealth. You didn’t need to know anything about brands, drivetrains, or interior fabrics to guess that an Expedition was more expensive than an Explorer, and an Excursion more still. Pure size turned out to be an incredibly effective substitute for the delicate logic of branding. Unlike the carefully cultivated advertising of yore, SUVs didn’t need an abundance of consumer knowledge to be effective in their message. Bigger meant more expensive, and thus more exclusive. Every kid of the 90s understood this, as did their parents. It was consumption reduced to its crassest, most vulgar form. Even the most ostentatious land yachts of the 50s, 60s, and 70s were rarely much larger than the more pedestrian sedans on which they were often based, and they utilized most of the same styling cues. The SUV was an unavoidable sensory assault that based its appeal not on some form of enlightened coexistence, but on physical dominance of the road. It was literally impossible to ignore.

SUVs trampled the notion of an enlightened, “real” luxury. They put paid to the idea that a luxury vehicle must somehow provide the owner with a superior driving experience, even if that only meant a plusher ride or easier steering. No, the remorseless logic of SUV ownership proclaimed. It must only be expensive and readily identifiable as such. Sure, there was an avalanche of phony “lifestyle” marketing associated with SUVs- they were “sport utility vehicles,” after all. We all know, though, that most SUV purchasers had no interest in the supposed rugged capabilities of their vehicles. They were minivan and wagon replacements with more swagger. As the Germans and Japanese joined in on the SUV orgy, this logic was carried to completion. The hopes of the David E. Davises of the world that the late Seventies had marked some kind of turning point in America’s love affair with the automobile were crushed. Those yuppies didn’t buy their Porsches, BMWs, Mercedes, and various other upscale European and Japanese hardware because they offered superior driving experiences or quality; they bought them because they were the latest trend in loudly advertised wealth. Those cars might have been excellent driving machines, but that isn’t why most people bought them. Toyota learned this lesson and hit a home run with Lexus. Nissan and Honda didn’t, and their luxury ventures floundered.

In the BOF era, the crude size contest undermined the traditional logic of branding to an unprecedented degree. It proved that customers could be receptive to expensive pleasure vehicles without the benefit of a premium brand image. A Land Rover Discovery with leather, a V8, and four wheel drive retailed for $36,100 in 2000; an Eddie Bauer Explorer with the same set of options was only about two grand less. BMW, Mercedes, Cadillac, and Lexus maintained their pricing premiums at the top end of the market, but their advantage was slim and their overall share of the market small. The reality is that nobody struggled to sell SUVs at huge margins in the late 90s and early 2000s, regardless of the strength of their brand. Honda was so desperate to get in this game that it agreed to stick its badges on a GM product. There were plenty of weak brands that got a new lease on life because of the SUV gold rush. When the SUV market entered a sharp decline around 2003, Oldsmobile imploded, Isuzu and Mitsubishi ceased to be relevant entities, and Saab and Mercury were fatally weakened. Sales were more a function of capacity and availability than anything else; “brand” was a secondary consideration. The incessant drive downmarket by virtually all of today’s luxury automakers, and their subsequent erosion of pricing power, is at least partially a legacy of what happened in the SUV market.

In this atmosphere of radical consumption, my contemporaries and I played out our formative years. I didn’t get as much seat time in SUVs as many of my friends, but I had a favorable impression of them. SUVs and trucks were cool. Bill Paxton drove a Ram in Twister. The kids drove an Explorer in Hocus Pocus, and people got eaten out of them in Jurassic Park. I had a die-cast Explorer that I played with constantly. I didn’t have any deep ideas about resource depletion, or climate change, or driving a car that actually put you in touch with the road. I just thought they looked awesome, and that cool people drove them- the main criteria of any adolescent boy. If nothing had changed in the American political and economic picture, I’d probably be driving one today.

Of course, things did change. 9/11 was the first major world political event that Millennials experienced in a meaningful way. The long-term implications of that are enormous and wide-ranging in scope, but for the purposes of the current discussion it’s sufficient to say that the attack and the wars that followed were fodder for a critical look at the American transportation complex. Nobody who was an adolescent in the mid-2000s could avoid the acrimonious debates about American energy policy that accompanied the wars. They couldn’t ignore the mounting crisis that was beginning to thin the SUV herd either. After the Iraq invasion, gas prices began to rocket upwards. Suddenly, middle class budgets were squeezed. Expenditures had to be cut in order to feed ravenous 14 MPG gas hogs. Family trips were curtailed. Parents carpooled. Young teenagers spent long hours in boring dealership waiting rooms as Mom and Dad desperately tried to get out from under their mountain of debt and into something that didn’t cost $150 to fill up.

Meanwhile, there were other problems that combined to make driving a gas guzzler deeply unfashionable and out-of-touch. Casualty lists were ever-present in newspapers and on television. Weapons of mass destruction weren’t found where they were supposed to be; nor was the zealot who had caused us all this pain in the first place. Despots in oil-rich nations laughed at us. The public debt ballooned. Climate change science became harder and harder to deny. Deindustrialization was a mounting problem. Corporate fraud cases exposed shocking levels of institutionalized avarice. Political discourse was ever frothier. In the grim atmosphere of national suffering and sacrifice, people began to question the wisdom of consumption for consumption’s sake. SUVs were beginning to decline in a major way after the gas price spike, but others doubled down- the H2 was introduced in 2002, you might recall. Even so, the long term projections weren’t good. The political Left embraced the SUV as a bogeyman and a symbol for a wide variety of ills.

Just as those kids born the same year the Explorer debuted were about to start their senior year of high school, the bottom fell out. Of everything. The BOF Era had really died that summer, when gas crested $4 a gallon nationwide. The financial crisis was just the nail in the coffin. Now we got to see just how over-leveraged our “boom economy” really was. It was a swift, brutal lesson about the value of living within your means. More than anything, it taught us that luxury and consumption were two different things. You can get by without fancy clothes, eating out, and expensive vacations. Those can be easily set aside when times are tough. It’s much harder to get out from under a car payment for a vehicle that is now too expensive to drive and which no dealer wants to take in trade; to heat a house full of empty rooms you never use; or to pay the mortgage on that same house when the fixed-rate term is suddenly up. I was lucky in that I had a family which understood these things, so our pain was minimal. Lots of people in our community weren’t so fortunate, as was the case all across America.

So what did observant Millennials learn from the BOF Era, when the dust had settled? Mostly, that overspending on commodities isn’t a smart or fulfilling substitute for luxury. You can’t go without a place to live or a way to get around. If you’ve over-leveraged yourself into buying more housing or vehicle than you really need, there’s no guarantee that you’ll be able to jettison those commitments when times are tough. This doesn’t mean that luxury cars or expensive houses are going to disappear. What it does mean is that the mindless “more is more” mentality of full-size SUVs with two passengers and poorly-constructed McMansions with no furniture in bland suburbs is dead. Energy and space are basic goods that everyone needs. They aren’t meant to be burned up in an endless quest for inefficiency. Neither is inexhaustible, or totally predictable in value. Better to indulge in something with a fixed cost whose long-term obligation isn’t dependent on the vagaries of global financial and commodities markets. Keep your money tight to your chest. Only take out debt that enriches your personal equity: student loans or perhaps a fixed-rate mortgage on a right-sized house in an established neighborhood. Of course, I can’t speak for everybody. There will always be people who make bad decisions as long as money exists. If we start to experience the same level of prosperity our parents enjoyed, we might regress. But we’ve seen the inevitable end to irrational exuberance, and the conspicuous waste that follows. The shameful discarding of SUVs, many with lots of life still left in them, is the final and most sordid legacy of the era.

Like the car-critical Baby Boomers of the 60s and 70s, Generation Y is looking for alternatives. The Boomers looked to fuel-efficient imports as an antidote to Detroit behemoths. The CUV is one of Gen Y’s alternatives to the excesses of the BOF Era. The CUV offers the efficiency of a car with the headroom, seating position, and interior space that were the most redeeming qualities of SUVs. Mid-size pickup trucks are dead, so they say- but new materials and engineering techniques are already making full-sizes more efficient. Hybrids and alternative energy vehicles are only going to grow in demand. The Millennials have been castigated as a generation that doesn’t care about driving or mobility in general, but that isn’t true. We just don’t want the millstone of vehicles that are too cumbersome, too inflexible, and too inefficient to be an effective hedge against the future. The Millennials will go on to buy plenty of cars, but not by the pound.

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Editorial: Cars In A Hole Fri, 21 Feb 2014 13:00:30 +0000 corvettemuseum1

Seeing a bunch of Corvettes in a hole sucks. It got me thinking though, about how falling into a Kentucky sinkhole last week was probably the most exciting thing to happen to the cars on display at the National Corvette Museum in quite a while. That’s a damn shame.

Car museums, while often interesting, generally leave me cold. They can be great if you’re at an event with a presenter who really knows the cars and can bring the subject alive. But just strolling through, gaping at one static display after another is like going to the zoo to see the killer beasts of the jungle.

It’s such a superficial experience, just looking at this stuff, and even then, you’re not allowed to really go poking around. The velvet rope or plexiglas barrier keep you from getting too close. You usually can’t lean over, under or into the cars, let alone touch anything, and that’s where the real interesting stuff is. Oh, you might catch a glimpse of some safety wire here and a trick carburetor linkage there, but hearing and seeing this stuff in action is very, very rare.

Hearing the skull-crushing open exhaust of a full-on racing V8, and even better yet, getting to ride in one of these machines that have been ascribed such significance, is how new fans are made. You say kids these days don’t care about cars? Plop 11-year old junior in the passenger seat of something that sounds like an Essex-class flight deck during the battle of Tarawa and I guarantee you he’ll see God.

I’m not totally against museums, and I’m certainly a proponent of keeping history on a roll. Is it necessary, though, to hang on to the 1 millionth Corvette produced, just because they managed to make 1 million of them? It’s not an engineering prototype, it didn’t win any famous races, it was built and then put into storage. What an ignominious end for a sports car named after one of the speediest types of sailing ships – two things that are all about action. I have the same question about the 40th Anniversary Corvette that wound up in the pit, and the Pace Car, too. These cars seem only pseud0-significant. In fact, when you think about it, they seem like cynical attempts to create falsely-important special models by decree.

Now, actual race cars, engineering mules, vehicles where we can clearly see the head-scratching process laid bare and get an appreciation for how success and greatness were eventually achieved, those are cars we can learn a lot from. Having these cars around is a living testament to the clever work undertaken by talented engineers and designers. But how can you really get an appreciation for this stuff when it’s merely a caged animal? And who determines which cars are “significant” and which are not? Some of the most clever ideas can be found on some of the lowliest cars, stuff that wasn’t “worth” anything more than its scrap value.

This isn’t a knock on the Corvette Museum or any other car museum, it’s merely an unresolved internal monologue that probably bears some discussion as we continue to lose touch with the most visceral part of our automotive past. Should you care about museums dedicated to cars? Is it a tragedy? Would it be a better or worse end for one of these things to have its brains dashed out during a vintage racing event, instead?

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Editorial: A Radical Solution To Canada’s Auto Industry Investment Problem Wed, 19 Feb 2014 17:17:22 +0000 front-450x333

FCA CEO Sergio Marchionne took to The Globe and Mail‘s editorial pages to make his case for government investment in Chrysler’s assembly plants in Canada. Marchionne is seeking government funds to upgrade the Brampton plant (which builds Chrysler’s rear-drive cars) and the Windsor plant (which builds minivans, and would be upgraded as a flexible plant) as part of a $3.6 billion investment.

For readers of TTACthe facts and figures will be familiar. Marchionne correctly asserts that of the $42 billion in recent automotive investment in the NAFTA zone over the past 5 years, just $2.4 billion has come to Canada. According to Marchionne, this new Chrysler investment would be larger than anything Canada has seen in recent years, securing thousands of jobs and the future of both plants for years to come. All it will cost is a reported $700 million.

Marchionne is correct in asserting that “every global automotive jurisdiction around the world” is giving significant handouts to auto makers, Canada is a small player globally, and cannot afford to keep pace with the United States and Mexico, which foot as much as 50 percent of the bill for new auto plants.

At one time, building cars in Canada made sense. Legacy plants left from the pre-Auto Pact era cranked out cars in an era of Detroit 3 dominance and a relatively low Canadian dollar. Health care costs, long a bugbear of the auto makers and the UAW, were covered by the government, eliminating a major financial sore point.

Now, times have changed. NAFTA has superseded the Auto Pact, and that means auto makers can set up shop in Mexico, where workers are content to build cars for mere dollars per hour, or in the South, at $14-$16 per hour, versus the $32 per hour figure that some estimate it costs in Canada. Marchionne could even utilize capacity in Europe, thanks to a Canada-EU free trade deal and minimal tariffs in the United States, to import Chrysler vehicles if he so chose to, though that’s a far-out scenario.

The question is whether Canada can afford to play the subsidy game, with its ever-increasing stakes. The prevailing view among many pundits is a firm “no”. The $700-million figure seems outsized in relation to the 10,000 or so jobs it might save in Ontario, and there is a strong sentiment against “corporate welfare” for an industry that constantly has its hand out looking for assistance.

There is simply no assurance that upon receipt of government funds, Chrysler or any other auto maker will make a long-term commitment to Canada, rather than simply hit up the government in a few years time looking for more money. And the fact that the CAW failed to secure any product investment during the last round of contract negotiations (unlike Ford and GM) only serves to leave Marchionne in a stronger position to pick up and leave when the contract expires in 2016 (coincidentally, the same time as the new minivans are set to debut).

But one proposal, being floated by media and finance types (as well as a couple of industry figures, off the record) and others I have spoken to in the past, involves receiving equity in an auto maker in exchange for government funding – an “investment” in the truest sense. From a free market standpoint, I find the notion of “Government Motors” rather troublesome. But we live in the real world, where ideology must take a back seat to what is happening on the ground right now.

And in this world, Canada cannot compete with Mexico and other low-cost jurisdictions, let alone the United States. A loan, tax credits or other forms of “investment” provide minimal upside with plenty of downside risk. Canada has no leverage, but is effectively funding FCA as an auto maker.

At least with some equity (such as preferred stock, like the bailout-era TARP program), the government can benefit from the upside in share price and have a seat on the board of directors. If FCA threatened to leave Canada, then the government could do something like threaten to sell their stake to a Carl Ichan or a Bill Ackman, the kind of activist investor that no company would actively court. Again, such a scenario is hypothetical, but it demonstrates the leverage that equity gives.

Viewed through that lens, the alternatives – continuing to act as an ATM for the auto industry, or telling FCA to get lost and risk losing a giant chunk of Canda’s auto industry – somehow seem less palatable.


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Hammer Time: Old Tech / New Tech Tue, 29 Oct 2013 11:00:18 +0000

Ah, the good old days. A time when smartphones were just PDA’s with hormone imbalances.

A time of basic cell phones, brick-thick cameras, and camcorders barely big enough to require a hand strap.

I remember all this old tech like it was yesterday, and for one simple reason: I still used all of them until recently.

Until about a month ago, I used the same basic cell phone I got for free back in 2008.

Absolutely nothing special, the bare bones MetroPCS phone enabled one-handed dialing and texting without even looking at the screen.

One thumb and dome. I mean, done.

That primitive device was brutally brilliant for yours truly because it was essentially “dope resistant”. It withstood a 45-MPH launch from  a Lincoln Town Car’s hood with nary a scratch.  I lost it dozens of times, once for two days. Yet I would invariably find it again and continue to beat it like a red-headed stepchild.

In time it was scratched, kicked, dropped, thrown, and beaten all to hell.

I treasured it. With each passing month, that miniature screen would get a little bit more faded and dim. Sometimes – not often…maybe once a month – the screen would freeze up or a button would stick.

No worries. At least not for a guy in a time warp. Even a few minutes of downtime each month was not nearly enough for me to invest in modern smartphones. Five-hundred dollars for a friggin’ phone? Ha! Not from this frugal zealot!

Then something happened…


I left it on top of a Subaru Outback and gave the keys to one of my customers. After a ten-minute test drive I heard the words that would change the course of my technological future.

“Steve, I really like this Outback. But I heard this strange clunking sound when I made my first turn. Are the CV joints okay?”

“Ummmm… I think it was my cell phone.”

A futile search on the nearby intersection yielded nothing more than a shocking amount of litter, and mild amusement from the passersby.

The time had come.

It was September 19th, 2013, and the cost of not having a phone for my business was far more dire than the relatively low cost of buying a good phone…a damn good phone…maybe even…the best phone?

So I powered up my fully-functional 2001 Pentium 4 with Windows XP and Googled “cell phones” and “best.”  A relentless assault of one-worded responses confronted me:


It was not because the iPhone was better than the Galaxy S4, which was better than the HTC One, which was…. what the hell are all these things?

No, it was because Apple was releasing the new iPhone 5C and 5S models the next day.

So I went to Wal-Mart.

And the AT&T store.

And T-Mobile.

And Best Buy.

But the iPhone 5S was nowhere to be found. It was worse than Chrysler’s release of the new Jeep Cherokee. I couldn’t find this thing in my neck of the woods to save my ass from first base.

I had to do something, anything, to get a decent cell phone.

I Facebooked. I called friends. I contacted people that I’m not even sure are my friends anymore.

One guy offered me a phone, but batteries were no longer available for that (2007) model.  However, the teenage girl working at the battery store was my savior.   She ducked in the back and emerged with something small, pink, and adorned with a Hello Kitty sticker.

I quietly sighed, but left with a new battery and the following phone for $40.


The damn thing’s called a lollipop.

Back in 2010 these phones were state-of-the-art…for the low end. But it could do pictures, voice, and even send your photos off to Kodak.

Kodak! Damn!  I was hitting the big time!

Within two days, I had it deciphered and was busy texting and calling away. The flip design would keep the sub-two-inch screen in stellar shape. All would be well again in my world.

Until, that is, I attended a nearby media event. Here, I realized brutal truth of my Luddite life.

I was the sole guy at the event without a smartphone. Not only that, I was the only journalist not typing away before the event began.

When the new car rolled out, they simply  snapped photos with their phones and sent them.

To online publications…to their social media pages…and probably a half-dozen other places thanks to various apps.

Me? I go and unsheath a 2005,  5-megapixel Sony digital camera, whose lens extends like a three-inch probe. I wait for the right exposure, take two pictures, and then the thing spontaneously seizes up in my hand like the relic it is.

Confession time: It wasn’t always like this for me; I used to be a hardcore technophile.

Party on Wayne!

Party on Wayne!

Twenty years ago, I was the first student at my college with a laptop. Thanks to it helping me overcome a fine motor impairment, my grades skyrocketed.  That’s Wayne by the way…

Technology was a beautiful thing in my life, and I almost accepted an offer with an IT consulting firm before my love for cars took over.

The car business, and the interrelated world of auto auctions, became my career, and I eventually became a ”tool guy” technologically.

If the hammer works, just keep on using it. Because “new” means “money”. And “nearly-new” means “nearly free.” And “old” means durable and often perfect for my limited needs.


A lot of long-time auto enthusiasts look at cars in much the same way. Older vehicles, especially those past a decade or even two, can perform the same functions as new models for a fraction of the cost.

Then again, you do miss a few pieces of technology as you go back in time: navigation, stability control, airbags. Everything from the steel polymers used to make vehicles, to the maintenance requirements for a daily driver, have changed substantially within the last ten years.

So here’s my question: Where do you draw the automotive line between old and new? Does a car with ABS, traction control, and dent resistant panels, like a 1992 Saturn, earn the right to be seen as a contemporary? Or does it have to Sync, Link, CUE and Think with mobile and hands-free technologies?

Where do you draw that line?

Oh, and if you happen to have a spare gold iPhone 5S with 30 times more gigabytes than my “pre-Ipod” computer, feel free to let me know.

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Editorial: Time For Fuel Economy Reform Fri, 16 Aug 2013 13:00:53 +0000 Low_Fuel_Graphic_on_the_FCD

The revised fuel economy ratings for the Ford C-Max aren’t the first time that an auto maker has been forced to backtrack on fuel economy claims – nor will it be the last unless meaningful reform is undertaken to ensure that fuel economy figures more accurately reflect the way motorists drive their cars in the real world.

The discrepancies between the EPA’s fuel economy figures and what consumers can expect stem from a number of issues. For starters, manufacturers are allowed to self-report their findings, with the EPA only auditing about 10 to 15 percent of the vehicles on sale in any given year. There are all kinds of tricks that auto makers can use as well. In the case of the C-Max, Ford used data from its Fusion Hybrid to determine the C-Max’s fuel economy, which lead to inflated ratings. While this may seem nonsensical to the outside observer, this is allowed under EPA guidelines, as the auto makers are only required to submit data for the volume model of any group of nameplates that use the same powertrain – even if they bear little to no relation to one another, as was the case here.

EPA test procedures also do not permit the use of ethanol. Across the country but particularly in emissions-conscious states, many pumps dispense gasoline with up to ten or even twenty percent alcohol, which significantly reduces mileage. The driving conditions used bear little resemblance to anything encountered in the real world. Tests are conducted on a dynamometer rather than on a real road, and 48.3 mph is considered “free-flowing traffic” on a freeway while city driving cycles use a barely-crawling speed of just 21.2 mph. Despite being utterly detached from reality, there is a good reason why the EPA fuel economy tests are designed this way. They aren’t meant to really test fuel consumption.

An article by Consumer Reports quotes one expert as stating that the tests

“…were originally designed to test emissions, not fuel economy.  They wanted to test a variety of speeds and accelerations.”

CR’s own fuel economy tests revealed significant discrepancies between the EPA numbers and their own road test cycles, with the biggest culprits being small turbocharged 4-cylinder engines. These tend to do well on EPA tests, since the low speeds don’t require much boost from the turbocharger. By contrast, real world driving does require the turbo to work harder when driven at speeds above 21.2mph, which is how a car like the Lincoln MKZ, with a 2.0L 4-cylinder engine, can return 16 mpg in the real world despite being rated for 22 mpg by the EPA.

With gas prices edging higher and fuel consumption becoming a priority among car shoppers, fuel economy tests have become increasingly importance for shoppers. Consumers compare “em-pee-gee” figures like they would have once looked at 0-60 mph times or crash test safety ratings, and rely on the EPA numbers to make purchasing decisions. Automotive marketing types know this, it’s not unreasonable to assume that powertrain calibration has sometimes been designed specifically with the fuel economy testing procedures in mind. Being able to hit a “magic number” like 40 mpg highway is a marketing coup. But being exposed as unable to hit that number in real life is a tenfold embarrassment, as Ford and Hyundai both know.

The current regimen of fuel economy tests have clearly outlived their usefulness.If the EPA test really is designed to measure emissions rather than fuel consumption, then that’s a strong indication of how relevant their guidelines really are. The next step is, what should be done to bring them back to relevance? Can the EPA test process be reformed? Should there be an end to manufacturer reported figures? Or is it worth ignoring EPA figures from now on in favor of someone like Consumer Reports or even a self-reporting site like Fuelly?


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Autobiography Of BS© : How I Harmed Sundry Animals Sat, 18 May 2013 21:34:59 +0000  

While a minor shit storm erupted the other day over the use of a word denoting short-haired women who love women, and, allegedly, certain cars, I did a lot of the soul-searching and self-reflection demanded from me, and I thought about all the scandals I may have caused in my life, and which I would regret, if the hate mails are an indicator. There were many scandals, and one of the most egregious involved a car. Oddly enough, it involved a car that allegedly is a top choice among men who love men. The scandal, however, involved people who were into dogs, fish, and other animals. And it was about the Volkswagen Jetta.

In 1973, at the at that time not so tender age of 24, I switched from journalism to advertising. The pay was good and got obscenely better every year. I started working for Volkswagen right away. There was a huge job opening for the FNG: The first oil shock was upon us, and everybody was convinced that cars will be a matter of the past. Seasoned advertising professionals went for safer accounts, like alcohol or cigarettes. I was told to work on Volkswagen, a dead-end job as everybody was convinced. Volkswagen and I fell in love with each other, the relationship lasted longer than most marriages, from 1973 through 2007.

My work on the Golf is documented here and also here. The full series of advertising lows and automotive high-jinx can be found here.

In late 1978, we received briefing materials for a car called Jetta. Actually, at that time, the car had no name, but a number. In the beginning, all briefing documentations were titled “EA,” followed by a number. The EA stood for “Entwicklungs-Auftrag” (development assignment,) the number was a running number. There were many gaps between the numbers when they reached us, many development orders never say the light of day. I don’t remember what the EA number of the Jetta was.

When we were given the documentation, it was handed over with a sneer. The Jetta was not very popular at Volkswagen, even when it existed only on paper. People at Volkswagen and everywhere else were in love with the Golf in 1978. It was a rip-roaring success, so were, to varying extents, the Passat, and the Polo, and the Scirocco. They were all hatches, and everybody at Volkswagen was convinced that from now on, all Volkswagen will be hatches.

The Jetta had an odd appendix that should not be there, it had a trunk.

Jetta Mk1 -Picture courtesy

The trunk was somehow grafted onto a Golf, like a strap-on to a  — let’s not go there. To this day, Volkswagen Classic, the arm of Volkswagen that is tracking the company’s heritage, says that the “base for the new model was the technology and substantial parts of the Golf MkI. The body of the donor car were inherited up to the B pillar.” According to the official history, “the ace card of the Jetta was the formidable 520 liter volume of the trunk.”

And it was exactly that trump card trunk that made my contacts sneer and roll their eyes. The car had a second name before it even hit the market. It was called “Rucksack Golf,” a name that quickly found its way into the media, where it lives on today.

The car was there, because there was a market for a car with a trunk: People who like cars with trunks. Two years before, the Derby had been launched. It was a Rucksack-Polo. The small hatch had a huge trunk strapped-on. The trunk was so big that we fit an eponymous trunk-bearer into it for advertising purposes, an elephant. But that’s a different story for another edition of the Autobiography of BS(c).

Studies had shown that there was a niche-market of around 80,000 units for such a car, and that it would be popular mostly among older people. The Derby did not outlive its first generation. In 1981, it was discontinued, the internal reason for its early death was that “less than 100,000 people buy it, and they are all old.”

The biggest market for the Jetta was expected to be in the U.S., where the Golf saw only limited success. People in America want a real car with a real trunk, we learned at the time, and somehow, they would not get it that a hatch was a much better design, as intended by God and his priests in white, the Volkswagen engineers.

At Volkswagen, cars with trunks were seen as treason, as a betrayal of the ideology based on the superiority of hatches. Derby, Jetta, Santana: Cars with strap-ons were seen as an evil popular in those odd OTHER markets. Internally, and probably to protect one’s imperiled sanity, it was quickly decided that the Jetta is ugly, and if the Americans want such an abomination, so be it, and let’s sell as many as we possibly can in Europe, even if the car is, did we mention it, ugly.

As documented in the Autobiography of BS ©, I did not know anything about cars, and even less so about car design. I declared the car is beautiful. The fact that the car was ugly had already leaked out, the media was waiting, not with bated breath, for the Rucksack-Golf, and it was decided to go on the counter-offensive and to go with my strategy that espoused the beauty of the Jetta.

When the launch campaign for the Jetta appeared, the billboard asked: “Which is more beautiful?” It showed a Jetta and a colorful winged fish. A poster said “Which is more dependable?” It showed a Jetta and a German Shepherd dog. And so forth, you can imagine the rest. You will have to imagine it because the campaign appears to be gone. My private archive, all on 35 millimeter slides, perished when a storage place in Brooklyn caught fire, and what did not burn was ruined by the Brooklyn Fire Dept. Slides are like W.C.Fields. They hate water. Volkswagen has an early catalog on-line, but no pictures of winged fish or German canines. It’s probably better that way.

Soon after the start of the campaign, there was a huge outcry. We were blamed for “animal abuse,” because we dared to show pictures of fish and dogs, instead of the usual happy people who drive our beautiful cars. I was requested to write a form letter to be sent to all who did complain. I wrote that we are sorry for abusing animals in advertising, and that we promise to henceforth abuse people only. I don’t think they sent that letter.

I was told that Volkswagen stated that no fish, fowl or canine were harmed during the production of the ads, due to the fact that the pictures were taken under the supervision of zoological experts. If people would have wanted the truth, they would have heard that the animals were stock photos.

We were perplexed. We had shown carefully casted chiwawas and countless other cute canines before. We’ve shown flocks of sheep grazing on meadows as proof of our greenness. We’ve shown many cars that were dogs. No objections were raised. This time, waves after waves of protests crashed into Wolfsburg. An association of German Shepherd owners threatened to use us as props in the training of their guard dogs, and there were more threats, not suitable even for this mature audience.

We never found out what the reason for this outcry was, but we had our suspicions. The beautiful winged fish was a Manta, which happened to be the name of the Opel Manta, a direct competitor of the Jetta, and the object of many jokes. The stereotypical Manta driver was stupid, and was married to a blond hairdresser. If you weren’t totally dense at the time, you got the not so subtle hint that the Jetta looked better than the Manta – even the stereotypical Manta driver got it. Sometimes.

To this day, Manta jokes are a staple of that oxymoron called German humor. Manta jokes are historically so important that one made it into Wikipedia:

“What does a Manta driver say to a tree after a crash? – “Why didn’t you get out of my way, I used the horn!”

TV Tropes has a rich collection of Manta jokes. Here are a few:

“What remains when a Manta burns down? A golden necklace and a crying hairdresser.“

“How does a Manta driver make a family portrait? He puts everyone in the Manta and races through a speed trap.“

“What’s the last thing that goes through a Manta drivers head, when crashing into a wall? The rear wing.”

(Should anyone feel traumatized by the insensitivity shown towards Manta drivers and blond hairdressers, please direct your protestations to Wikipedia, TV Tropes, or Google.)

Volkswagen of course denied any connection to Manta, the car, and steadfastly maintained their position that this was an innocent campaign to underscore the elegant lines of the new Jetta, that the Manta fish was chosen for its beauty, and that any similarities with other Mantas living or dead would be purely coincidental. Comparative advertising was against the law, and there was an unspoken (or maybe secretly agreed) code of conduct that forbade slights against the competition.

Then and now, taboos were and are there to be broken. Of course, there was the suspicion that behind the shitstorm – at the time fought only with the lumbering weapons of letters to the company and to editors – was more than outraged animal rights activists that protested against the abuse of a fish in car advertising. Of course there was the suspicion that behind the outrage were slighted Manta drivers, or even Opel itself. Opel would have never admitted it either, so it turned into a proxy war.

Jetta MK2 - Picture courtesy

Volkswagen did not take the campaign down. Doing so would have been a sign of weakness, an admission of wrongdoing, and frankly there were no other posters to take the place of the offensively objectionable and profoundly pejorative fish and dogs.

Showing backbone in the face of vicious attacks for silly reasons has a tradition at Volkswagen. The war of the fish and dogs was a minor incident compared to the many years of open and nasty warfare by Greenpeace against Volkswagen, one of the more environmentally attuned automakers. Knowing that it is on the good side, VW did not back down, and did not submit to greenmail. Finally, Greenpeace took its ball, pouted, and went home. “The dogs bark, but the caravan moves on” is an old Arabic proverb, it is part of Volkswagen’s unreleeased corporate philosophy, and it is worth stealing. Husband your resources for when the shit really hits the fan. When criticism was justified, such as in the case of forced labor, Volkswagen was among the first to admit it and to do something about it.

Time heals all wounds, and like many small proxy wars, the brouhaha soon landed in the dustbin of history. The campaign won many medals (except with the animal rights people, the nascent PC police, and Opel), and Bertel was promoted Creative Director, and later President of the advertising agency.

In Germany, the Jetta was a limited success. It sold 90,000 in its first year and it was downhill from there. Later, I tried to resurrect the fish and dog campaign to stem the dwindling of the sales. I argued the campaign had worked before, so why not try it again. Usually, that logic was irrefutable at Volkswagen, in this case, it only received a pained “not again, Bertel.”

As predicted by the marketing strategy, the Jetta was and is a huge success in the U.S. The Jetta Mk I lived on for decades in China. In Europe, later Jettas suffered from an identity crisis, and were named Vento, Bora, or Sagitar in China.

Note: Do not use this article to gripe about  the use or abuse of of a word denoting short-haired women who love women. Extensive room has been given to more than 200 comments, which all are still there.  When threats were issued, the discussion was closed to protect TTAC, and, frankly, the commenters. Do not continue the closed discussion here.  Any such comments would be immediately removed , and their authors would be banned for violation  of an administrative action as set forth in TTAC’s commenting rules.


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Autobiography Of BS, Now Available On Dead Trees Fri, 17 May 2013 14:06:56 +0000 vw_propagandaThose who frequently demanded that the Autobiography Of BS © is turned into a book or a blockbuster movie see themselves a little closer to their declared goal. The series will be a monthly feature in Top Gear Deutschland, a very glossy magazine and spin-off of the TV series. The BBC-inspired buff book already hit the stands in Germany, and arrived in my Japanese mailbox today.

The series begins with a German version of How I Lied about the Golf, germane due to the fact that the Golf will be 40 next year, and also due to the fact that it just entered its 7th generation.

The historical relevance of Golf & BS has been acknowledged by Volkswagen’s Heritage Dept. and documented  on the Volkswagen-Classic website.

Top Gear prominently features what Volkswagen wisely decided to sidestep:  That internally, the success of the Golf was very much doubted before the launch in early 1974, and that its triumph was a streak of luck, albeit one paired with a very good car.

The magazine can be bought for €5. The movie rights are still up for grabs. Please peruse our comment function.

vw_propaganda ]]> 7
Companies! Cheap! For You, Special Price: GM’s Hong Kong Dealings Mon, 22 Oct 2012 13:14:06 +0000

Hong Kong, and I speak from experience, is a great place to incorporate, to save taxes, and to throw a cloak of secrecy over financial operations which otherwise would be out in the open. In the case of GM, it is also a great place to save their Korean behinds. In December 2009, GM sold a 1% stake in its Shanghai-GM (SGM) joint venture to the Hong Kong part of its Chinese partner SAIC for the paltry sum of $85m. GM also put its India business into a Hong Kong based joint venture (HKJV). GM provided the India business, SAIC provided cash. As it turned out later, unearthed in Ed Niedermeyer’s seminal oeuvre about the mystery golden share, SAIC also underwrote a $400 million loan. In its darkest hour at the end of 2009, GM was kept afloat by the Chinese. Now, history seems to repeat itself in some convoluted way.

Also at the same time in 2009, the Korean Development Bank was trying to gain control of GM-Daewoo. That company, GM’s main source of low-cost, fuel-efficient car development, was in urgent need of cash which GM did not have. GM-DAT was kept in the GM fold after a $413m cash injection into its Korean subsidiary, only weeks before the Hong Kong deal. The money came from China via Hong Kong.

Three years later, GM is sitting on a taxpayer-enhanced $33 billion cash pile, and it seems to be time and opportune to use some to unwind some Asian positions. Again, the hub is Hong Kong. Last week, it became known that GM buys back most of the shares in is (Hong Kong held) India business for the again paltry sum of $125 million, leaving partner SAIC with a token 7 percent. On paper, this was a great deal. When GM put its India business into the HKJV, the business was, according to SEC filings, valued at $200 million. Now, most of it is coming back for $125 million. Not that SAIC would receive that money. GM did a capital raise, SAIC elected not to match it, and was diluted to 7 percent. It is surprising that SAIC would let control slip so easily. India is the world’s next growth market, with a capacity rivaling that of China. The Chinese car industry was effectively locked out of India, SAIC snuck in on GM’s coat tails. And now we are supposed to believe that SAIC walked away from that prize, after it had put in anywhere between $300 and $500 million in cash? Highly un-Chinese.

Be it $200 million or $125 million, the amounts are awfully low for Indian car plants with a capacity of more than 300,000 units per year. As a comparison: Tesla, a company that had nothing more than big ideas and a few prototypes of EVs of dubious value, could raise $226 million at the IPO. As another comparison: BMW budgets $260 million for a pocket-sized 30,000 unit plant in Brazil that does nothing more than assembling kits from Germany. These Indian numbers simply do not compute.

Remember Korea? As if on cue, Korea pops up after some strange Hong Kong transactions are settled. Over the weekend, Reuters reported that GM made an “informal offer” to the Korea Development Bank to buy back the 17 percent the bank holds in GM Korea. GM currently owns 77 percent. A price was not released.

How does this all fit together? We have no idea. However, we are sure it does.

And remember the famous golden share? In April, it was announced that GM would get the 1 percent share in its Chinese joint venture back, for a huge price: GM and SAIC established a sales company, SGMS. SAIC received a 51 percent majority control of the sales company. So far the theory. The reality, filed in the most recent 10-Q to the SEC, looks different. In the document, GM is listed as a 49 percent owner of SGMS. And it is still listed as a 49 percent owner of Shanghai General Motors (SGM). According to the SEC filing, SAIC has 51% both in the new sales company and the old joint venture.

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Generation Why: I Don’t Want To Share Anymore Mon, 28 May 2012 13:00:14 +0000

My iPhone has no less than 7 social apps on it (Facebook, Facebook Messenger, Twitter, Tumblr, Tradyo and Instagram), not to mention Google Maps, which like the aforementioned programs, can utilize my phone’s built in GPS beacon to share my location with others (including Apple). My recently departed 1997 Miata was the anti-iPhone. No GPS, no traction control, a barely there ABS system, no electronic throttle. Everything mechanical. My next car will be similar. Simple, robust, resilient. What if we no longer have that option anymore?

Starting in 2015, new cars sold in the United States will, under proposed legislation, have “Black Box” electronic data recorders to help glean all kinds of data. Frankly, that’s the least of my worries, as much as I don’t like the idea of every event behind the wheel being logged.

In my own slightly paranoid opinion, the EDR program is a mere red herring, setting the stage for something else entirely. The end of driving as an autonomous activity. Market forces, like gas prices and car insurance premiums have slowly been putting a squeeze on the notion that getting behind the wheel and just going somewhere is the ultimate act of individual freedom. Now, we have Google’s autonomous (no irony intended) car program, which, as far as I can tell, is a great way for them to serve up more ads. If you’re not focusing on driving, you can watch Youtube content on your Google Android phone, check your Gmail, manage your social life with Google Calender and be totally engrossed in the Googleplex of targeted advertising using GPS beacons in your car and your self-driving Prius.

We all hear the canard that modern cars have never been safer, faster or more fuel-efficient, and it’s not only true, but a boon to the average consumer (perhaps at a cost to the enthusiast – but that’s another discussion for another day). More fuel-efficient cars means less fuel consumption – but it also means reduced revenue from the gas tax, which helps fund infrastructure projects like highways. Raising the gas tax in an era of economic depression would be like peeing on a political third rail, and even in good times, it’s challenging enough to do so. An alternative would have to be drawn up, and according to some well-placed D.C. sources, the inevitable alternative is cost-per-mile fees for driving.

Yes, that’s right. The government could track your every movement in your car (and it will be placed in every car) and bill you for it. I know that despite the best arguments from Grover Norquist & Co., we really do have to pay taxes to grease the wheels of society. Something is going to have to give. If it ever comes down to cost-per-mile taxation, there is going to be an absolute hellstorm of anger and vitriol, no matter who proposes it. I can remember as far back as childhood when Max Mosley and the FIA were showing off speed-limited vehicles based on GPS technology for European roads, and the British rags, already itching for a fight after the implementation of Gatso speed cameras, gave Max the kind of whipping that he’d have to pay £750 an hour for in a Knightsbridge dungeon.

Even if individual freedom is a distinctly American concept, the automobile is the main conduit for that all over the world; not the bicycle, not the motorcycle, not the bus or the train. Developing socities, like India and Vietnam, move on from the scooter and motorcycle as soon as their citizens can afford a car.

More than just a form of mobility, the automobile as individual transportation is a middle finger to the push towards communal living via the internet; “checking in”, “sharing”, “geotagging” and every other noxious form of soft exhibitionism that the tech nerd crowd craves (and, of course, uses to line their pockets – the more you share, the more data they have to help refine their “targeted advertising” systems). The rise of social networks is a constant theme in the media, yet young people are growing ever weary of social networks. Oversharing is frowned upon, and I’m far from the only one to have “nuked” my old Facebook profile (dating back from high school) taking with it all my valuable data, photos and status updates, while creating a new, more restricted account with a much smaller list of friends. The pendulum swing towards living one’s life publicly will not continue in perpetuity.

I spent the past 4 days in New York City, with a mandate to shut off all electronic communication, and enjoy what the greatest city in America has to offer; the grandest architecture, the most walkable streets and a culture that could not exist anywhere else in the world. I never once missed email, Facebook or Twitter, but I did miss driving. The streets of New York, crowded and brutal they may be, were filled with interesting vehicles. Town Cars and yellow cabs everywhere, vintage Land Rovers in Greenwich Village, sport bikes on Broadway, a British Racing Green Lotus Evora on Madison Avenue, a G55 AMG on Wall Street. All of them represent not just freedom of movement, but freedom of possibility. At 4 A.M., the Evora could hit well into the triple digits on one of those multi-lane boulevards. The G55 could drive all the way across the beach at Montauk without getting stuck.

These are, not coincidentally, the kinds of activities that are not meant to be “shared”. You can take someone along if you want to tresspass on protected land, or hit triple digits tearing through Midtown, but you’re not going to want to post photos or videos on Facebook. These things are the kind of experiences that stay forever in the imperfect recesses of the mind, to be discussed sotto voce for years to come among close friends. To “share” them would be profane, corrupting their very essence. Breaking the law isn’t always necessary, but we will always need a hedge against the utopian designs of those who want us all to ride bicycles and live our lives in the cloud. As I reach back into the caves of my mind, where the “Timeline” can’t yet reach, I recall the black NSX of my father, V6 at full song,and  that same car becomes ever more appealing. Maybe Honda will be kind enough to give it a factory re-furbishing, so that I can enjoy the comforts of an essentially brand new car, albeit one free of electronic throttles and data-loggers.

We’ve already seen how old cars are capturing the hearts and minds of our youth more than any of the shiny new stuff on dealer lots. Might there be a new avenue for bringing old cars back to new? How would a car with the retro cachet of something old, combined with a modern refresh from the factory do in today’s world? Yes, it will certainly disrupt the current model of pumping and dumping inventory and making it sell, but a two-fold pushback, against conformist, boring new cars and their monitoring devices, revive the radical, reactionary idea of the automobile as one’s ticket to freedom.


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Blind Spot: America’s New Motor City Mon, 21 May 2012 20:40:16 +0000

Throughout the history of the automobile in America, one city has been synonymous with the industry and culture of cars. Booming with America’s great period of industrialization, Detroit became the Motor City, the hometown of an industry that created a blue-collar middle class and a culture based on personal mobility. But as America has entered the post-industrial age, as the focus of our economy has shifted from production to consumption, Detroit has been left behind. Long used to defining consumer tastes, Detroit was caught unawares by the changes wrought by globalization and the rise of information technology. And as America’s traditional auto industry struggles to redefine itself in the new economy, another Motor City is rising to meet the challenges of a new age.

Though not often recognized as such, Los Angeles has long been America’s “other” car capital. Developing during the rise of the automobile, Los Angeles has become a place where automobile ownership is not just a necessity, but a fundamental aspect of the culture. And as a result of its headlong embrace of the automobile, Southern California has contributed some of the most important elements of automotive culture. From the drive-through fast food joints that now dot America’s landscape to Harley Earl’s design revolution, from hot rod culture to smog control, it is impossible to imagine modern American life without L.A.’s unique automotive achievements.

Industrial-age Detroit was surely grateful for Southern California’s innovative attempts to reshape society around the cars it produced. But as long as the automakers dominated the wealth produced by America’s love affair with the automobile, Los Angeles was seen as little more than Detroit’s best customer. Though an important ally in promoting automotive culture, Los Angeles’s value to the industry was little more than offshoot of its major industry: entertainment. But as global competitors entered the US market, Southern California’s car-crazed culture became one of the first to embrace the imports. And as Detroit’s near-monopoly began to erode, the balance of power shifted: from this point on, consumers would drive automotive tastes with increasing independence.

With this shift, Los Angeles began its ascent in the automotive world. While Detroit lay mired in the industrial age, Southern California developed a taste for the new global menu of automotive options, and simultaneously embraced the new revolution in information technology. Its status as a taste-maker grew, and its focus on consumer opinion, fashion and communication put it in close touch with the values that were reshaping America’s economy. Now, with the information and consumer-economy revolutions largely realized, Southern California is becoming the new center of gravity for America’s auto business.

In fitting with the values of this new world, L.A.’s automotive juggernauts neither produce nor themselves sell automobiles. Instead of factories and dealerships, they have invested in server farms and data models. Rather than controlling information to maximize profits in support of an industrial supply chain, they create and share information in service of the consumer and market efficiency. And through this revolution, the two titans of Southern California’s “automotive industry,” Edmunds and Truecar, have become some of the biggest players in the business of buying and selling cars. got its start just as Los Angeles was coming into its own as the capitol of American automotive consumption, and well before the information revolution began to take hold. In 1966, it began publishing booklets which consolidated automotive specifications as a tool to help buyers make informed decisions. Over the years, it has evolved this service from print to CD-ROM, to web page and mobile app. And with new technology, it has dramatically expanded its services, offering everything from news, reviews, and specifications to industry analysis and forecasting, from a live consumer-advice hotline to dealer reviews and its “True Market Value” pricing tool. Never losing focus on its original insight, that consumers need help navigating the crowded new car market, Edmunds has embraced every new technology to expand on its mission and become the most established gatekeeper to the burgeoning world of online auto research and sales.

Entering Edmunds’ brightly-colored offices in Santa Monica, it becomes instantly clear that the company looks to Silicon Valley rather than Detroit. With its whiteboard walls, open cubicles, espresso machines and video game room, the ambience is clearly inspired by Google rather than GM. And like Google and Facebook, Edmunds is finding that its consumer service is just the beginning of its opportunities. So massive is the traffic that Edmunds’ car buying website generates, it has developed its own value as a model for the larger market. As the patterns of research at shift, the company can track changes in interest in specific cars and brands with an ingenious in-house application, giving it insights into the market that no automaker  can ignore. By serving consumers with the latest technology, Edmunds can not only generate huge revenue from advertising and sales leads, but create valuable intelligence for the industry as well.

Though Edmunds’ business model may now embrace the industry as well as consumers, it hasn’t lost sight of its original mission. Indeed, as it has assumed leadership in the burgeoning auto consumer services industry, it has embraced its role as an advocate for automotive consumers in every venue. Leading this charge is former CEO and current Vice Chairman, Jeremy Anwyl, an intense, often-iconoclastic dynamo who has become the closest thing the automotive business has to a public intellectual. Rising to prominence through his regular commentary and industry analysis, Anwyl has become a regular figure at Washington D.C. hearings on everything from fuel economy regulations to distracted driving. Over a brief lunch, he jumped with ease from topics as diverse as EV tax credits and NHTSA incident reporting to sales forecasting and media criticism, fusing a generalist’s fascination with every aspect of the automotive business and culture with an unshakeable focus on serving consumers. While Detroit’s executives often seem inward-looking and overly focused on their traditional industry patterns, Anwyl demonstrates the importance of an automotive culture that engages every arena in which automobiles play a role. His ability to serve as the auto consumer’s advocate-in-chief, not only serves Edmunds’ mission and image well, it helps cement the consumer power that launched his company to prominence.

But Edmunds’ rise, from booklet printer to market-making, policy-influencing juggernaut, has not gone unnoticed. Numerous companies have tried to match its success and compete for its influence, but few have given it any real trouble. The simple fact is that Edmunds has been working at its mission so long, and has been so in tune with cultural and technological shifts, that any rival would have to make enormous investments in order to match its suite of services and aura of leadership. And yet, in just a few short years, one company has managed to break through Edmunds’ near-monopoly, and join it as the second Southern Californian juggernaut of automotive consumer services. That company is TrueCar.

The short roots of TrueCar’s stunning rise to prominence lead back to Edmunds. Formed by a core of Edmunds employees, TrueCar grew out of just one element of Edmunds’ sweeping empire: the “True Market Value” pricing tool. While the larger site spread its resources across an entire ecosystem of consumer information and advocacy, TrueCar’s mission was laser-focused on creating the best real-time pricing tool on the web. By investing in every possible source of data on new car sales, and by developing a slick, intuitive interface focused solely on delivering localized market price transparency, TrueCar has been able to claw out a niche in one of the most lucrative automotive consumer services. And though Edmunds downplays comparisons with TrueCar, it’s clear that the upstart firm has established itself as a major player.

TrueCar’s more focused culture is evident in its almost zen-like offices high atop Santa Monica’s historic clock tower. In sharp contrast to Edmunds’ primary colors, copious espresso machines and young employees blowing off steam at the company pinball machine, TrueCar’s headquarters are smaller, less self-conscious, and a more obviously-focused workplace. Not that TrueCar couldn’t have a vast Google-like complex if it wanted: just last year, in the depths of of the economic downturn, the company brought in a $200 million round of investment. But, as CEO Scott Painter explains, TrueCar’s spends its millions largely on acquiring and analyzing pricing data. Where Edmunds seeks to offer a complete research and shopping experience, Painter refuses to break focus on pricing until total market transparency is achieved.

But where Edmunds’ broader focus has allowed it to assume the mantle of consumer advocate in a generally non-confrontational manner, TrueCar’s narrower but deeper approach to serving consumers has ruffled feathers among dealers and manufacturers. For an industry long used to consumers overwhelmed by the vast variety of brands, models and trim levels, and for dealers who have long relied on asymmetrical information to pad their profits, TrueCar’s crusade for pricing transparency has tipped the balance of power so far towards consumers as to be seen as a threat.

Towards the end of 2011, TrueCar, falling victim to its own success, came into conflict with dealer groups, manufacturer “dealer marketing allowance” schemes, and state regulators tasked with protecting local franchise laws. In the wake of that confrontation, TrueCar has had to make some specific changes in how it operates its business, but the industry’s reaction showed that TrueCar’s mission to deliver real pricing transparency was changing the way automotive retail works. And as Detroit has proved over the last 40 years, businesses who cling to a comfortable past in the face of inexorable historic forces get left behind.

Though Edmunds and TrueCar eye each other warily, and though there is certainly some overlap in their business models, they aren’t really competitors. Together, they form the vanguard of a movement to use information to empower consumers, and I would argue that a consumer that wants to make the most of this new movement would use Edmunds to help decide what kind of automobile might suit them best, and use TrueCar to help price and negotiate for it once that decision has been made.

Competition between the two will make both better, which in turn will arm consumers with ever-greater power in the marketplace. In this way, the two behemoths of online car buying services will continue to strip power from the automakers, force them to pay closer attention to consumers, and drive the innovations that will allow producers to more efficiently serve an increasingly-informed market. And as this dynamic plays out, the producers and marketers of Detroit and elsewhere will have no choice but to recognize the rise of America’s new Motor City in sunny Southern California.

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Blind Spot: It Ain’t Easy Being Green Tue, 17 Apr 2012 22:04:40 +0000

When government, media and industry agree that a trend exists, it’s generally taken as fait accompli. After all, these three institutions wield immense cultural power, and together they are more than capable of making any prophecy self-fulfilling. But there’s always a stumbling block: acceptance by the everyday folk who actually make up our society. And when a trend is taken for granted, the ensuing rush to be seen as being in touch with said trend often generates more heat than light. Such is the case with the trend towards “green cars.” Few would deny that they are “the future,” but at the same time, there’s been precious little examination of how this future is to be realized. And when such examination does take place, it tends to raise more questions than it answers.

Case in point: the Union of Concerned Scientists recently published a report examining just how “green” the “greenest” cars available, namely electric cars, are. By examining the average C02 emissions of the various regional power grids, they are able to show on a roughly apples-to-apples basis how carbon-efficient EVs are in comparison to their gasoline-sipping cousins. And their findings show that in broad swathes of the US, pure-electric cars are little better than hybrids like the Prius in terms of average C02 emissions.

This ACS report is something of a dual-edged sword. On the one hand, it makes an important point about EVs: that they are only as environmentally-friendly as the grid from which they draw their power. This fact has long been ignored by policymakers who take the “greenness” of EVs for granted and create uniform national EV stimulus, as if EVs were uniformly “green.” On the other hand, the ACS clearly has a pro-EV agenda, and its report concludes that

There are no areas of the country where electric vehicles have higher global warming emissions than the average new gasoline vehicle.

Given that EV offerings are currently limited to the Compact and Subcompact segments, this is hardly a fair comparison. And since the EPA includes cars like the Bentley Continental GTC as a “subcompact,” a fair comparison would take some real work. To be fair though, the UCS is correct when it points out that 45% of Americans live in the coastal regions where relatively clean grids offer strong environmental incentives for EV use. More importantly, those areas which have dirtier grids tend to be the same regions (the South and Midwest) where geography and development patterns create more practical disincentives for EV use. For this reason, the somewhat disappointing results of the study are unlikely to dramatically hurt the nascent EV market.

Still, this geographical distribution has important consequences for public policy. For one thing, it points out the futility of a nationwide EV incentive program, at least as an environmental policy. Luckily, this reality seems to have taken hold in D.C., where EV-only incentives are being broadened to include multiple fuels and encourage local solutions. On the other hand, the fact that EVs are a hot trend means local governments are often more anxious to show off their trend-awareness than craft sensible policy based on local realities.

For example, Colorado has one of the least “green” grids in the country, and yet its state government has been one of the most aggressive in handing out EV tax credits. Prior to 2010, Colorado allowed Tesla buyers to take up to $42,000 in credits. Today EVs get a $6,000 incentive in addition to the $7,500 (soon to be $10k) federal credit, and a local group has received half a million dollars in federal grants to promote EVs in the state. Given that Colorado-based EVs emit equivalent emissions to a 33 MPG combined gasoline car (think: Hyundai Elantra), this is proof that hopping on a PR-driven bandwagon often outweighs the actual benefits of such “environmental” policies.

But, in a profoundly ironic twist, Colorado may well become a leading market for EVs… and not just because of its generous government incentives either. In fact, Colorado’s relatively dirty grid actually makes it one of the cheaper states in which to operate an EV. In its cost analysis of individual cities, the UCS finds that Colorado Springs’ 2.4 cents-per-mile operating cost for a Nissan Leaf is one of the cheapest in the country, especially when compared to cities with the best emissions scores. Though there’s not enough evidence in this study to support a direct link between the cost and cleanliness of electrical grids, it’s no surprise to find that they do trade off with each other to some extent.

This is one of the key takeaways from the report for the simple reason that running cost, rather than pure environmental benefit, is what will drive the EV market beyond its early adopter niche. And as utilities invest in ever-greener powerplants in hopes of improving the environmental performance of EVs, running costs will rise. And as EVs become more popular, increased demand on the grid will further drive up prices. This tradeoff encapsulates the dilemma of all EV stimulus: the hoped-for environmental benefits are dependent on the mainstream economic viability of EVs, which in turn depends on cheaper (rather than cleaner) power and much, much cheaper EVs. The UCS report’s conclusion attempts to square this circle by pushing EV adoption as the overriding concern, noting

Of course, cleaning up the nation’s electricity production won’t deliver large reductions in the transportation sector’s emissions and oil consumption unless electric vehicles become a market success. While they are now coming onto the market in a much bigger way than ever before, EVs still face many hurdles, including higher up-front costs than gasoline vehicles. Lower fueling costs for EVs, however, provide an important incentive for purchasing them, and our cost analysis of 50 cities across the country shows that EV owners can start saving money immediately on fuel costs by using electricity in place of gasoline.

While this is true enough, it fully ignores how the market works. For one thing, the fuel savings touted in the report are in comparison to an “average gasoline compact vehicle,” and therefore fails to account for most of the market segments. Consumers buy cars that fill their needs, and many Americans need cars larger than a compact. Furthermore, though those savings are estimated to be as much as $1,220 per year (for a Nissan Leaf), these savings do not include amortization of the EV’s up-front cost premium. Consumers will see “immediate savings” on fuel costs, but will be far behind on total ownership cost for years.

Currently the EV market is truly a “green” market, as potential EV consumers are currently motivated by the desire to reduce their carbon emissions. But EVs simply won’t have much of an impact on national emissions until they offer the kind of “green” that actually motivates consumers: money, in the form of real savings. As long as federal and state governments focus, as the UCS has, on carbon emissions, EVs simply won’t find much of a market. If, as the UCS claims, reductions in transportation-sector C02 emissions require mass EV adoption as a prerequisite, the carbon question is currently little more than a distraction. Environmental benefits must give way to economic reality, lest all of the possible “green” benefits of EVs remain a permanent mirage.

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Time To Say Goodbye Tue, 17 Apr 2012 13:38:59 +0000

Derek Kreindler is pondering selling his lovely BRG Miata and using the funds as “a down payment on a home of my own.” *Sigh.* Here on the West Coast of Canada, I’d have had to sell my (imaginary) Aventador to pull off the same trick. Spend half-a-million bucks: get half-a-bunkbed in some split-level commune. Pot to piss in, not included.

But that’s not his point, it’s whether or not to let the First One go. The first car you paid for with your own money. That first taste of wheeled freedom. Be it ever so humble, you’ll never walk away from your first without a twinge of regret and many backwards glances.

I remember when I did it.

Funnily enough, my first was also a Mazda product: an ’88 Mazda MX-6 GT. It couldn’t have been more different than the Miata though: wrong-wheel drive, muscle-car weight distribution, styling by Sir Arthur Doorstop. Kissing cousin to one of the worst-named cars ever, the Ford Probe, the MX-6 was a touring coupe in the manner of the Integra or the Celica, but floppier than either. Most were automatic: think Toyota Solara designed by someone who only had a ruler.

I too withdrew what was – to me – a large sum of money in a non-descript envelope and nervously got on public transit. The trip took me far from the ivory towers of my University campus, deep into the East Side of Vancouver. Those days, it was a place of fringe-thinkers and alternative living, public parks full of discarded hypodermics and the air redolent with mary-jane.

Nowadays, condos starting at $865,000. 50% sold. DON’T MISS OUT.

And there she was. Red. Stick-shift. No damn sunrooof. A enormous bright pink “PRINCESS” sticker on the back window like a tramp-stamp, which was the style at the time. Love at first sight? Nope, love at first drive.

The ’6′s front tires were balder than Billy Corgan; some mass-market generic brand that has since collapsed into obscurity. When I shifted into second and walked on it, used to the heavy-footedness required to get the family Land Rover up to speed, the MX stuck its nose in the air and said, “smoke ‘em if you got ‘em!”, laying a patch for half a block. SOLD.

When I think back on it, perhaps not my best negotiation. Had it ever been in any accidents? “Uh, not sure.” Well, it clearly had. The spoiler had a giant dent in it and there was some bondo’ing under the rear passenger-side tail-light that looked like 3rd-grader papier-mache. I think I offered $100 less than ask and the seller grasped for my hand like I was throwing him a life-ring (the Princess thing: it was his girlfriend’s car). Oh well, done deal.

Whatever condition it might have been in, the MX was tougher than nails. JDM and EUDM models got a lovely 16-valve 2.0L engine called the FE3 or FE-DOHC that is even now quite desirable as a swap. If you’re interested Derek, you can make it fit into a Miata with an FC RX-7 transmission.

In North America, we got a truck motor: the iron-block 2.2L 12v engine out of the B2200. As the late-80s/early-90s were the era of GT-means-turbo, the engineers hung a teeny-tiny snail off the exhaust manifold and called it a day. It made about 6.5lbs of boost and gave you about 145hp. It also might just be the torque-steerin’-est car ever made, as the restrictive head meant you had 190lb/ft of surgetastic torque on tap any time you tried to pass. A ‘Speed3 is an absolute pussycat by comparison.

Around about this time, the increasing prevalence of automotive forums meant that you could get advice – mostly bad – on how to modify your car. Unfortunately, the MX-6 had all the aftermarket support of a Goggomobil. I bought the very last short-throw shifter in Western Canada: it had been sitting on a shelf so long that the box was partially decomposed. Maybe Jesus built your hot rod; I bought most of my parts from Methusela.

Luckily, the lack of readily available go-fast goodies meant that the few MX-6 loving lunatics out there were oracles of barn-door ingenuity and do-it-yourself low-budgetry. I had access to my Dad’s tools, and a Ph.D in automotive cursing. LET’S DO THIS.

And boom goes the dynamite.

Taking this picture was a monumentally bad idea. Guesstimating from the dyno results of similarly-modified cars, the ’6 was making about 280 lb/ft of torque at 3500 rpm, with no limited-slip diff, nor equal-length half-shafts, or electronic trickery, nor even particularly accurate steering. I absolutely loved it.

There was nothing like the 1-2 shift in this quick-spooling front-driver to put a grin on your face. Every time you’d get bark and scrabble, wrestle with the steering and then a surge as everything around you went backwards. It was red. I was twenty-something. I believe the local constabulary were able to open a library wing with my, um, donations.

14.2 in the quarter, but it wasn’t just that it was quick, it was mine. I broke it, then I fixed it. I installed the rocker arms upside-down (don’t ask), drove it a couple hundred miles, and then figured out my mistake. No problem. Stripped second gear and blew a headgasket: bought a parts car for $200, took what I needed and sold the leftovers for $300. Some lady backed across three lanes of traffic and whacked into the quarter-panel. Settled privately and spend the money on an mandrel-bent turboback instead.

The MX-6 was like a faithful retriever, soaking up all the abuse as I pulled at its ears and poked its snout. It’d let me down from time to time, but not unless I’d done something stupid like forget to re-clamp the intercooler hoses.

But then it was time. I knew. I’d met this girl and things were – happening. At the 1/8th mile drags a buddy had simply smoked me with his WRX wagon and I’d always wanted one of those. Maybe in a little while…

She went to Australia for an elective, me to follow in three weeks. I put the MX-6 up for sale and only one guy showed. I took him around the car pointing out the dents and dings, the drip from the tranny, the tick that meant one of the hydraulic lashers was going. He looked non-plussed. “Well, maybe take me for a spin. You drive.” I hit second hard. He didn’t ask for a single dollar off.

I took the cash, pretty much what I’d paid, rode my bike down to a Jeweller’s and paid for the engagement ring I’d picked out weeks ago. Obviously it took a bit more than an old Mazda to cover things, but it was a symbolic gesture. My most prized possession, now in another form, to be given away as a promise.

I miss this car a lot. I wonder if she’s still out there somewhere, though I doubt it. But I don’t have a single regret about letting her go. Sometimes, you just need to know when to hold them, and when to walk away.

Goddam Kenny Rogers.

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It’s Not Just A Car – It’s My First Car Mon, 16 Apr 2012 13:00:30 +0000

It’s just a car. That’s what I keep telling myself. It’s my first car. A 1997 Mazda Miata. British Racing Green with tan leather. A rip in one of the seats. Torsen LSD, Bilstein coilovers, a roll bar. Needs a new 02 sensor. Otherwise in great condition. In the last year, it’s needed a new alternator, new brakes. Body is good, paint is only so-so. Someone made me an offer I’d be stupid to refuse. I am usually responsible with my finances. No debt to my name. Rarely carry a balance on my credit card. Roughly a quarter of each paycheque goes into a dedicated savings account. I’d be an idiot not to sell it. My self-control is failing me.

It’s just a car.

That money, plus the money I’ve set aside in savings from my meager auto journalists salary will give me enough for a down payment on a home of my own. No more renting. A chance to get in to Toronto’s booming real estate market before I get priced out by foreign investors buying “escape pods” to flee instability at home. A chance to buy a great place when the market inevitably corrects itself.

It’s just a car.

I can buy an old E30. Or a new(er) Outback. Go rallycrossing, slide around in the dirt, not give a shit where I park it and if it gets dinged. A car I am not afraid to drive in winter. A car I can drive comfortably on the highway. No more buzzing at 4000 RPM. No more getting nearly run off the road by big rigs. “An Outback?” asks my Dad’s friend. “Why? This is a perfect time to own a two-seater.”

It’s just a car.

But it’s my car. My first car. In high school, I decided I wanted a Miata. Cheap, rear-drive, a rag top. A Lotus Elan for someone who can’t turn a wrench. I worked at a game booth at the city fair. I was a carny, for god’s sake. I worked on the loading dock of a store that sold camping supplies, hauling boxes off of a truck on 95 degree days, dodging hoards of rich housewives trying to grab shitty Made In China trinkets for their kids, moving the merchandise up steep flights of stairs for $8.75 an hour. I had a Miata to pay for.

It’s just a car I bought myself, and kept running myself. No help from anyone else.

I started looking in February ’09, and only found a good one in April. The exact one I wanted, with all the options. I withdrew my life savings in $100 bills and ran home from the bank, afraid of getting robbed for the small brown envelope I stuffed in my front pocket. My hand shook when I signed my name on the title. After taxes, registration fees and an oil change I had less than $100 dollars left. I drank Olde English – or nothing at all for the rest of the summer. I didn’t care.

It’s just an old Mazda. 202,000 km on the clock. They made nearly a million of them.

597 Miatas were sent to Canada in 1997. Most of the early ones like mine have been ravaged by rust and neglect. My friends called it a girls car. It’s not. To prove them wrong I took off-ramps at double the posted limit, watched their knuckles go white with terror as the Miata begged for more.  Girls called it cute, and I did the exact same thing, but hoping for more. Every time I hit the middle of third gear, they would all throw their arms in the air and cry out. Once, I finally worked up the courage to hold my crush’s hand, and I looked into her eyes as I slotted the shifter into the next gear. All of a sudden, a gasp from her. I slammed on the brakes just early enough to avoid slamming into the back of a brand new, Brilliant Red S4.

It’s just a car.

The same girl’s house, a year later. She is newly single, I am dating around. Lately, there is undeniable tension between us. I’m driving a bright red 2011 Shelby GT500. Zeppelin blaring. Heel toe downshift as I pull up to her lawn. I am so fucking cool. She’s waiting, long-legged, rosy-cheeked and radiant in a clingy summer dress – wearing a frown. “Ew,” she pouts. “This is so tacky. Where’s the Miata?”

It’s just a car.

I am in denial that this car is a part of my identity. My self-image is not tied to it. But it has become a part of me. Neighbors, friends and relatives ask where it is when they drive by my house. Half the time it sits in a lonely lot while I’m driving a press car. In winter it barely moves, save for a fresh snowfall, when I know there’s no salt on the road. When it’s cold out, the doors nearly freeze shut, and getting them pried open requires a gentle tug that is equal parts finesse and brute strength. The thin sheetmetal and leather interior makes the car absolutely freezing, and with a parka on, there’s little room to maneuver. It is truly miserable to drive a Miata in winter. Until you dip into the gas just a bit too much and suddenly, a quarter turn of opposite lock is required to bring the car back in to line.

It’s just a car.

“Man, this must be ill for hollering at girls.” I tell my friend that I’m hesitant to take my car out, since the car is having trouble starting. But it’s a clear, cool night and Queen St West is full of women in short skirts and high heels. My friend yells at anything with two legs and two X chromosomes, without success. I pull back in to the parking spot, and just out of curiosity, try to start the car again. It’s dead. I almost kill myself trying to reach the trunk mounted battery with the jumper cables. The car gets towed twice. My friend is now a major recording artist who just played at Coachella. He still doesn’t have his license.

It’s just a car.

And there are so many other cars I want to own. An Audi urS4. A Lotus Elise. An air-cooled 911. A GMC Typhoon. A black on black 1991 NSX – to me, the pinnacle of the automobile and an equally nostalgic part of my childhood. Even the current NC Miata. It’s so much better than my car could ever be. I want to own them all. I want my Miata too.

It’s just a car.

I worry that I will forever regret selling the Miata. I tell myself that it’s a lousy highway car, unsafe in a crash, liable to be run off the road by an 18-wheeler, only capable of carrying two, with a small trunk, gutless and underpowered, a chassis too sloppy to be rewarding on the track, profligate with fuel for such a small engine, useless for half the year, uncomfortable with the top down on a sunny day as the sun beats down on my scalp and my back sticks to the poorly designed leather seat, lousy on long drives.

It’s just a car.

But it’s also a vessel for so many memories. Sneaking out at 2 A.M. to go across town to a girls house. Driving home from a cottage with the roof down, far away from the smog of the city. Looking up and realizing I couldn’t remember the last time I’d seen any stars. Shaking off feelings of apprehension and malaise with a girl I loved (but not like that), driving to a hidden spot by the lake with a view of the skyline, and having it all melt away. My Blackberry buzzing in the cupholder with an email from an old neighbor who moved to California. I pull over on a busy arterial road to read it. I thought he was long dead but he’s 93 years old and doing quite well, thank you very much. My first track day. My second track day where I spun for the first time. The roof was down and as I put all four wheels off, grass and dirt flew in to the cabin, landing all over my lap. Screams, laughter, joy, terror, endless parking receipts that trace my movements over the last three years.

It’s not just a car.

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Generation Why: Canadian Teenager Wants Free Vintage Car From Loving Owner Thu, 02 Feb 2012 19:52:50 +0000

A 19 year old student in Halifax, Nova Scotia put up a classified ad looking for a vintage car. The make, model, year and body style are all irrelevant. What Spencer, the ad’s creator, is looking for is “…a classic car with a past that I can keep alive, and continue to keep alive through future generations, continuously adding to the history of a special car.” And he doesn’t want to pay a cent for it.

For those of you who live and die by Farago’s fatwa of 800 words or less, be warned - the ad is a bit lengthy. Spencer wants a cool vintage car, something to set him apart from the masses. It must be able to go on ultra long jaunts through the Nova Scotian countryside while delivering the utmost pleasure behind the wheel and also be a reliable grocery-getter. As far as I know, no vintage car can do all of the above in a trouble-free, cost-effective manner.

Nicholas Maronese of Sympatico Autos spoke to Spencer in an interview, and the comments were split between criticizing the “entitled” attitudes of today’s youngsters, and sympathy for a young man with a dream. Personally, I think Spencer is way in over his head, and his repeated viewings of The Graduate have put ideas in his head that have zero grounding in reality. Owning a modern, reliable car is expensive. Owning a vintage car, with carburetors, flimsy build quality, scarce spare parts and peculiar driving characteristics is expensive and trying – especially for someone on a student budget.

The idea of carrying on someone else’s automotive legacy strikes me as a flight of fancy, the kind that dissolve rapidly when your car won’t start at 3 A.M. in a desolate parking lot in a shitty neighborhood. Everyone’s first car, no matter what it is, will be part of a series of unpredictable and unknowable series of triumphs, failures, financial ruin, bliss and heartbreak. But they are yours, and yours alone.

Fortunately for Spencer, there is a car that can do everything he wants, whether its buying cereal or blasting around with the top down – it’s called a Miata. It’s great on gas, drives like a dream, and starts every single time you turn the key. Hopefully you have your own Elaine to keep you company.



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2011: The Year In Auto Sales Fri, 13 Jan 2012 21:13:10 +0000 2011 was a fascinating year to follow auto sales. With the overall market up over 10%, and hot new products hitting showrooms, there was definitely room to grow… and yet everyone seems to have an excuse for why growth wasn’t stronger. Japanese automakers, the biggest losers of 2011, had a strong of natural disasters to blame the bad year on. Detroit showed strong volume gains in terms of percentage growth, and earned respect in growing segments where they were previously weak, but couldn’t match the expectations of its perennially over-optimistic boosters. The Korean manufacturers showed strong market share growth but lack of capacity prevented them from bounding into the top tier of the US sales game. In fact, only the European luxury manufacturers could point to 2011′s sales performance with unalloyed satisfaction, as they grew some 29.5% as a group, from an already-strong volume position. So, given these mixed results, what was the lesson of 2011?

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

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

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

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

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

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

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

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NAIAS: Chevrolet’s Concepts, From The Eyes Of Gen Y Wed, 11 Jan 2012 03:00:13 +0000

Back in September, I attended the launch of the Chevrolet Sonic for another outlet. Despite GM’s insistence that the Sonic was being marketed at “millenials”, I was the sole member of the press that fit that demographic. Despite the cheesy, ham-handed attempt at being in touch with the demographic (a parking garage festooned with contrived, faux-urban graffiti, for example), the Sonic left a favorable impression. It is an honest, practical, fun to drive car that is affordable for young people – well, some of them.

Although I have a full-time gig with salary and benefits, I am in the distinct minority among my peer group. Most of us should have had a relatively trouble-free path to maintaining the middle class (or upper-middle class) lifestyles we were born into. All of us have some form of post-secondary education or have a learnt a trade, but few of us have stable, full-time jobs. Most of my friends who graduated from good schools with 4-year degrees are stuck working contract jobs with no benefits and little promise of stability.I would need both hands to count the number of friends who have been let go this year. Many are stuck working unpaid internships in the hopes that it may lead to a contract gig. Renting overpriced apartments in gentrified neighborhoods seems to be the future. Tight credit, low wages and high real estate prices in urban centers makes home ownership seem as distant as winning the Powerball.

If rent and rising food prices weren’t enough, gas, insurance and parking are just added expenses on top of the rising cost of living. In short, buying any is just not on the radar for a lot of people in my demographic. Chevrolet seems hell bent on becoming the brand of choice for Gen Y, and their new concepts, given the silly monikers of Code 130R and Tru 140S (which look more like inebriated SMS typos than vehicle names) are their latest salvo.

Chevrolet said that they consulted with countless members of Gen Y to find out what they want in a car. Although various outlets have taken Chevy to task for not creating a diesel, 6-speed manual turbocharged rear drive compact that gets 50 mpg, looks like an Audi R8 and costs $10,000, these concepts are probably a step in the right direction. They are efficient and although they may not be particularly fast, they are unique looking in an attractive way, rather than in a bizarre, Hyundai Veloster manner. The concepts may look derivative or even silly to us, but to the average consumer in their 20′s, they don’t look like a subcompact hatch or (worse) a bell-shaped subcompact sedan, and this is a victory in itself.

Don’t let web pundits fool you either; most young people don’t give a rats ass about speed beyond if it feels quick when judging by the seat of their pants – gas is expensive, street racing carries much stiffer penalties than the post WWII boomer days, and if anyone really wants a performance car, they’ll probably buy something used. It’s not that the car has to drive poorly, just that 0-60 times and lateral g’s are way down the list for a lot of people who haven’t been actively following the development process of the Scion FR-S (read: 99% of the population).

Despite all of GM’s efforts, the big problems for the future remain structural. More and more young people don’t even have their driver’s licenses (speaking anecdotally this seems to be a female trend. My girlfriend and many of her friends don’t have their drivers licenses. The boyfriends do the driving), and the precarious economic situation of young people, combined with the allure of a used car from a prestigious brand makes the idea of a new car less and less appealing.

At this point, you’re probably looking to see what my conclusion is regarding Gen Y, the future of Chevrolet as a brand and where cars will be going. Honestly, I don’t have one. I’ve been alive for a shorter period of time than many of you have had driver’s licenses, and there are too many external factors that will determine the above. If gas prices go up, or we approach Spainish levels of youth unemployment – or both – then Chevrolet’s problems are going to be far greater than “how can we get young people to identify with our brand.”  If I knew the answer to these, I’d probably be off somewhere else making a lot more money and doing a lot more societal good. As it is, I am but a mere automotive blogger, with a loyal and intelligent readership, a 15 year old Mazda and a rewarding job that offers a steady income. I am blessed, even if the prospect of owning my first new car seems very far off.

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Ten Simple Things The Industry Could Do For Me This Christmas Sat, 24 Dec 2011 20:08:26 +0000

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

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

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

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

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

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

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

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

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

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

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

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

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

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TrueCar Versus Honda: Online Car Buying Challenges Hit Home Wed, 21 Dec 2011 17:45:59 +0000

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 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.


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Volt And Consequences: GM Responds To NHTSA Volt Investigation Tue, 29 Nov 2011 17:25:23 +0000

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

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

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

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

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

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

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

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

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

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

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

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Bob Lutz, PR Guru: How “Too Much Quality” Is Killing Automotive PR Mon, 29 Aug 2011 21:02:25 +0000

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

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

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

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

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

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

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

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

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

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

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

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

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

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The American Mercedes Tue, 16 Aug 2011 20:16:54 +0000 No, I’m not talking about the cars and SUVs that Mercedes assembles in Alabama. Yesterday, Jack Baruth told us about the relationship between the American Steinway and German Daimler companies and the cars that Steinway started assembling under license from Mercedes in 1905.  When I read Jack’s article I remembered that I had something in my collection of press kits, sales brochures, images and and assorted swag (with apologies to Mr. Zimmerman) that I’ve been accumulating for the past decade or so of working the press previews for the Detroit, Chicago and Toronto auto shows. In 2006 Mercedes Benz distributed a reproduction of a reproduction. It’s actually a very cool little piece of automobilia and a nice facsimile of a historical artifact, in a couple of ways.

It’s a small booklet, less than 40 pages, called The American Mercedes. It was originally distributed in 1906 by the Daimler Mfg. Company, on Steinway Ave. in Long Island City, and promotes the 1906 45 horsepower “American Mercedes”. It was reproduced in the early 1960s, and the copy M-B gave out in 2006 had a 1961 afterword and an insert from 1964. The whole package is chock full of historically interesting aspects.

To begin with, before we get to the original 1906 text and illustrations, it’s interesting to look at the afterword and insert from the 1960s. The company distributing the booklet then was called Mercedes-Benz Sales, Inc. Just as the address of the Daimler Mfg. Co. on Steinway Avenue is significant, so is the address of M-B Sales Inc. on South Main Street in South Bend, Indiana. South Bend, of course, was the home of Studebaker. The Studebaker Museum is there, and from Earth orbit you can still see the trees that spell STUDEBAKER at the former Studebaker test track near Bendix Woods west of South Bend.

Mercedes-Benz Sales Inc. was a subsidiary of Studebaker-Packard, who had acquired the US import and distribution rights for M-B cars in 1957. Looking over the copy from the 1961 and 1964 editions, it’s truly remarkable how the Mercedes brand went from almost non-existent in the US to a leading luxury brand. The 1961 afterword discusses how there were only 32 M-B cars registered in the US in 1952, climbing to 3,446 in 1957, when Studebaker started distributing them and expanding the M-B dealer network. By 1961, sales had risen to almost 13,000 units a year. M-B Sales pointed out that number was exceeded by “only two small, inexpensive imported automobiles”, and that there were 60,000 satisfied American owners of M-B products. I’m supposing that those two cars were undoubtedly the VW Beetle and most likely the Renault Dauphine, which had some measure of success in the late ’50s and early ’60s. There were 350 dealers and a network of parts warehouses to service them. The “less than $4,000″ price for a Merc in 1961 was pitched as representing “very good value indeed”.

The insert from 1964 mentions the story Jack related about William Steinway’s 1888 trip to Germany and his ride in one of Gottlieb Daimler’s quadricycles and the history of the US Daimler Manufacturing Company and the cars they assembled. It talks of similarities and differences between the brass age Mercedes and the then modern 90 HP models, and of course it stresses Daimler and Benz’s roles in the invention of the automobile and Mercedes-Benz’s reputation for engineering and quality. In three years registrations increased to 90,000, which means that there was a slight downturn in annual sales from the ’61 figures.

The booklet itself is a great look at the dawn of the automobile age, early advertising and some American culture as well. The cover says The American Mercedes above the Daimler Manufacturing Company’s logo, which appears to have combined German and American eagles into a single crest. The brochure is illustrated with very nicely executed drawings of the car and major components, and stresses the high level of quality of the Steinway made American Mercedes. Of note is the fact that the brochure stresses that all critical components of the car were made from imported German ores and steel, not what they regarded as inferior American metal with less strength and greater weight. It also stresses that the car would be “an exact reproduction of the … foreign Mercedes”. It would still be a couple of years before master machinist Henry Leland would make Cadillac the standard of the world and change the reputation of American automotive engineering. Though it touted the car’s European origins, the brochure stressed that the royalty they were paying the Daimler company was less than import duties would be on the same car if imported from Germany. From the earliest days to today’s “transplant” assembly facilities, local production has often made economic sense. The text is much more technically detailed than promotional materials would be today, but then in 1906 you had to be a genuine auto enthusiast and  pretty decent mechanic just to drive a car and keep it running.

The 45 HP American Mercedes was a large car, built for seven passengers, available in two lengths, with wheelbases of 3225mm (127″) and 3279mm (129″). For comparison purposes, that’s in mid 1970s Cadillac and Lincoln territory. The larger car had a body 8″ longer than the shorter wheelbase car. Red was the standard color but the company offered custom colors.

CARS are furnished with all necessary equipment, such as tools, tire repair kit, horn, two oil sidelights, to gas head lights and one tail light, etc. There is also included an assortment of the spare parts more frequently needed, such as chain link valve and igniter springs, igniter electrodes and piston rings. Price with Standard Equipment, $7,500 F.O.B. New York City.

It’s a fascinating look at early automobile ownership and it’s worth reading the whole thing. There’s no copyright issue anymore, it’s long since passed into the public domain, so I scanned the entire booklet as well as the insert and you can see it in the gallery below.

Note: The TTAC photo gallery player doesn’t always work well. I’ve also put up a post on Cars In Depth with a Flash player that actually works and plays the images in proper order.


Zemanta Related Posts Thumbnail americanmercedes1 americanmercedes2 americanmercedes3 americanmercedes4 americanmercedes5 americanmercedes6 americanmercedes7 americanmercedes8 americanmercedes9 americanmercedes10 americanmercedes11 americanmercedes12 americanmercedes13 americanmercedes14 americanmercedes15 americanmercedes16 americanmercedes17 americanmercedes18 americanmercedes19 americanmercedes20 americanmercedes21 americanmercedes studebakerpackardmercedes190sl ]]> 10
Unlocking The Secrets Of GM’s Golden China Share Wed, 10 Aug 2011 21:26:34 +0000

Having been asked by a certain newspaper to review the new book “American Wheels, Chinese Roads: The Story of General Motors in China [more info on that review coming soon], I’ve been spending my quiet moments over the last week or so looking into GM’s Chinese operations. The book’s author, Michael Dunne, documents GM’s rise in the Middle Kingdom from the perspective of a well-informed outsider, revealing just how delicate one of GM’s best-performing global maneuvers really was. But after following the rise of GM in China, Dunne notes the December 2009 announcement that GM was selling a 1% stake in its Shanghai-GM (SGM) joint venture to its Chinese partner SAIC (for the paltry sum of $85m no less), arguing that GM had made a dangerous leap of necessity. This sale, implies Dunne, could well have been the tipping point that leads to GM being surpassed by its erstwhile junior (in size, technology and global reach) partner, SAIC. And, in the words of “one GM executive who used to work in China,” GM would need

good luck getting that back.

But, back in June, GM CEO Dan Akerson told GM’s shareholder meeting that he wants to do just that, saying

We have an option to buy that 1 percent. It’s our intention to exercise that.

With Akerson’s announcement, the mystery of GM’s “golden share” sale deepened. At first the question was simply “why would GM sell its 1%?” but now there’s another mystery: why would GM want it back? After some digging, it seems that we are now able to resolve the first mystery, and report why GM sold its one percent. But the whole deal is still surrounded by several layers of mystery which conceal whether GM will in fact be able to regain its 50-50 partnership in SGM, why it would want to and whether its gambit was ultimately worthwhile. And given how important China has been (and continues to be) to GM’s global business, this is definitely an issue that GM- and industry-watchers will want to better understand.

First of all, it’s important that we understand how the deal was announced, as it caused a good deal of head-scratching here at TTAC and around the auto industry. As the WSJ [sub] reported at the time, GM played down any major implications of its apparent surrender of an equal partnership in one of its most important markets:

“In actual fact we operate that way already, so that’s not a significant change,” said Nick Reilly, who stepped aside as head of GM’s international operations Friday to run its European business.

GM said the transfer was necessary to help SAIC consolidate earnings from the Shanghai GM joint venture, having been previously barred from doing so as a 50:50 partner under local financial regulations.

The NYT added

the 51 percent stake would give S.A.I.C. the right to approve the venture’s budget, future plans and senior management.

But, as Dunne and others have pointed out, no other Chinese joint ventures have made this move, suggesting that SAIC’s desire to consolidate earnings were not the only reason for the deal. Further confusing the situation was the tiny purchase price: by selling its controlling 1% for a mere $85m, it seemed as if GM were giving away the keys to the Middle Kingdom for chump change. And Akerson’s revelation that GM has an option to reclaim the 1% confused all of this even further: after all, with SAIC insisting that it retain its consolidated earnings in the case of a return to the 50-50 partnership, it would seem that the sale part was unnecessary to that goal, which could have been accomplished with a (relatively) simple contract. What, I’ve been wondering for days now, was really going on with this deal? How to square all of this seemingly contradictory information? Did GM make a worthwhile gamble, or did it foolishly fumble away a key market?

After much digging and many emails to GM, the situation is finally starting to make a little sense. And in the process we got our hands on some information that has yet to be published in the mainstream media (to the best of my knowledge). GM confirms that it does in fact have a call option for the controlling 1% stake, but refuses to give any details about how it might be exercised or what its terms are. The only specific information about the deal comes 196 pages into a 534-page 10-K filing [PDF here] covering calendar year 2010. That filing reveals that, although GM does have the option to buy back the 1% stake, it’s not in the driver’s seat to make that happen…

 We also received a call option to repurchase the 1% which is contingently exercisable based on events which we do not unilaterally control.

Of course GM won’t disclose what these events are (although Akerson does hint that SAIC’s restructuring is somehow an issue), but the admission that the company doesn’t “unilaterally control” the events required to buy it back keeps the shadow of doubt over Akerson’s stated “intention” to return to a 50-50 partnership. Still, with it’s back against the wall, it’s still possible that GM could have signed a deal that might still keep it a junior partner in SGM… had there been enough cash on the table. $85m was clearly not enough to make such a deal worthwhile, but according to the 10-K filing we’ve obtained, there was more in the deal for GM than that.

In February 2010 we sold a 1% ownership interest in SGM to SAIC-HK, reducing our ownership interest to 49%. The sale of the 1% ownership interest to SAIC was predicated on our ability to work with SAIC to obtain a $400 million line of credit from a commercial bank to us… As part of the loan arrangement SAIC provided a commitment whereby, in the event of default, SAIC will purchase the ownership interest in SGM that we pledged as collateral for the loan. We recorded an insignificant gain on this transaction in the year ended December 31, 2010.

So, the truth comes out! This arrangement has been hinted at before, but until we obtained the relevant 10-K, the exact amount had never before been reported. So, between the $85m price and the $400m loan, that 1% stake was worth closer to half a billion dollars than the $85m initially reported. That means that, on the one hand GM got a reasonably fair price for the controlling stake in SGM, but on the other hand, as Bertel noted

If Akerson wants it back for whatever unfathomable reason, then it will cost him.

Without knowing exactly what GM got for its 1%, Dunne argues that the deal was “the end of the beginning” for GM’s successful Chinese efforts. And though GM’s ability to regain a 50-50 partnership is still very much in question based on what little we know about the call option’s details, at least GM got significant short-term help for the gambit. And it’s probably no coincidence that GM was able to keep GM-Daewoo (GM-DAT) in the corporate fold when, just weeks before the SAIC share sale was announced, it injected$413m into its Korean subsidiary. At the time, the Korean Development Bank was trying to wrest control of GM-DAT, which would have left GM without its main source of low-cost, fuel-efficient car development. Presumably keeping Daewoo was worth whatever risk now stands between GM and its call option… just as keeping Opel’s development capacity was worth billions in restructuring costs (probably not coincidentally, GM insisted that the Daewoo bailout cash “came from overseas operations”).

In short, GM’s gambit was a far better business move than we initially thought… although it’s also clear that the reasoning it gave at the time was disingenuous at best. But, thanks to Akerson’s “intention” to exercise the option, we also know that GM is not as comfortable as the junior partner in SGM as it initially made it seem, and the RenCen is obviously anxious to reel the decision back in. But what will the buyback end up costing? What “events” need to happen to make the buyback possible? And, since reclaiming the 1% would neither help GM financially or give it more functional control over its JV (as far as we can tell), why is it so intent on buying back that one (presumably) extremely expensive share? As with so many examples in China-US business relations, solving one mystery tends to lead only to more mysteries…

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What’s In A Name? Mon, 08 Aug 2011 18:21:22 +0000

When should a redesigned car get a new name? Whenever the old one wasn’t a success? Or virtually never? Can car companies count on the excellence of a new car to reverse whatever damage was done to the public perception of the model name in the past?

GM, as Paul Niedermeyer noted a few years ago, has a tendency to give a redesigned car a new name when the old one fared poorly in public perception. Which has been every time with its compact cars: Corvair, Vega, Monza, Cavalier, Cobalt, Cruze. Most recently, GM opted to abandon the Aveo name in North America in favor of “Sonic.”

Ford started to replace the names of many of its cars a few years ago. Not because the cars hadn’t sold well, but because someone had the brilliant idea that all Ford car names should start with the letter F. The Windstar became the Freestar, partly in an attempt to escape the minivan’s bad reputation. And there was also a Freestyle crossover. My wife wondered if they might replace “Thunderbird” with “Freebird.” After all, there was already a song to serve as the car’s theme. Then new CEO Alan Mulally, an outsider with virtually no knowledge of the auto industry, decreed that the “F” fixation was stupid. (Though for some reason he let the even more confusing MK_ mess continue at Lincoln.) Despite the damage Ford had done to the old names, they retained broad recognition by car buyers and thus equity. The Taurus name, after being reduced to fleet queen status, was returned to Ford’s current large sedan, from which it progressed to the current semi-premium car. And Ford’s redesigned compact remains a Focus despite a huge upgrade in both its specification and price.

I’ve always possessed a visceral dislike for GM’s willingness to flit from nameplate to nameplate. But this is because (apparently unlike GM) I refuse to admit defeat and give up. I also don’t like to throw anything away (luckily I have a wife to counterbalance the latter). But these reasons aren’t rational. Perhaps giving up on a nameplate when a model has failed in public perception and starting over with a new one is the smart thing to do?

Thanks to Ford, we have an answer. Until recently, Dearborn didn’t think it could sell a Euro-spec car at profitable prices in the U.S. So while Europe received better and better C-segment cars, the North American Focus soldiered on with minimal updates, and with even these focused on taking cost out of the car more often than they improved it. Then Mulally decreed that Ford would make and sell the same cars in Europe and North America. So the next Focus (a 2012 model which arrived earlier this year) would have to command much higher prices from American car buyers. A challenge in itself, retaining the Focus name for the new car should have made this even more difficult. Americans had learned to think of the Focus as a cheap car for people who couldn’t afford a better one, right? Would those seeking a premium small car even consider one with this tarnished nameplate attached?

As much as I don’t believe it replacing nameplates, I don’t think I’d have made this bet. But Ford did, and they’ve won. The Focus’s average transaction price year-to-date in 2010 was $15,424. This year, despite a few months with the old model, it’s $20,684. Despite this massive jump in the car’s price, in percentage the largest I’m aware of, the cars have been in short supply. They’ve been attracting an entirely different group of buyers, people who could afford a larger car or any direct competitor, but who are choosing the Focus because they like it the best, not because of “the deal.” Six percent of those sold are even the Titanium trim, which can list for over $27,000.

Conversely, look at GM’s experience. Many of the new cars gifted with new nameplates were mediocre, so it’s not clear how blame for lackluster sales should be apportioned. The Cobalt and G6 were significantly better than the Cavalier and Grand Am, but perhaps not good enough to sell without heavy incentives even if the old names with their broader public awareness had been retained. But what about the G8? Might it have sold better, and perhaps saved Pontiac in the process, if it had been labeled a Bonneville or Grand Prix? One possible exception: the Cadillac CTS, though it likely would have done just as well if the Catera nameplate had been retained. Then there’s the height of stupidity: scrapping a strong nameplate. Acura replaced “Integra” and “Legend” with “RSX” and “RL.” Today the former is gone and the latter might as well be.

Judging from the success of the 2012 Ford Focus, when the car is good people quickly forget any negative associations attached to a nameplate by the previous generation. On the other hand, GM has rarely if ever benefited from scrapping old nameplates in favor of new ones. The upcoming Chevrolet Sonic might well succeed—initial media reports have been positive—but this will be despite rather than because of its new name.

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Mazda’s SKYACTIV Technology: The Comprehensible Bits Thu, 04 Aug 2011 20:57:00 +0000

I am sitting in a parking garage in a throng of torpid auto-journalists, nearly all of whom are wearing the same glazed expression of terminal information overload. On-screen, molecules of fuel and air are doing a complicated little computer-animated dance, as narrated by Susumi Niinai, program manager at Mazda’s powertrain development division. His English, while Japanese-accented, is better than, y’know, mine, but the concepts he’s explaining approach the limit of comprehensibility to the lay-person. Mind you, it’s a pretty nice parking garage.

Some of you, like me, may have been hearing all the rumblings about Mazda’s new SKYACTIV technologies and been wondering whether it’s going to turn out to be a series of technological breakthroughs or, alternatively, a load of complete cobblers thought up by some Zoom-Zoom marketing guru.

Good news everyone! It’s the former. Bad news everyone! I have to try to explain it to you. And I borderline don’t understand it myself. Here goes…

First, let’s set aside Niinai-san’s well-illustrated presentation on the SKYACTIV engine series for a moment, and talk in generalities. As was repeatedly hammered into our heads throughout the day, Mazda is a small company with limited resources.

What’s more, they’re a small company in trouble. How much trouble? Well, previous posts have outlined current flagging sales and enough profit drops to alarm Mazda fans. This is not good. To be frank, if Saab goes the way of the 9-2x Dodo a few orthodontists may be mildly upset, but for the rest of us it’s a big ol, “Meh.” Mazda on the ropes though? For the enthusiast driver, that’s bad.

So how does a beleaguered company without the resources of a Toyota or Nissan take on the pressures of ever-increasing efficiency standards? More than that, how do you pull off competitive MPGs while still maintaining the apparently-conflicting mandate of maximizing driver involvement as a priority? Two choices: cut corners, or clip the apex.

Make no mistake, Mazda isn’t interested in broadening appeal by blurring their focus. I heard the concept of jinba-ittai repeated so many times during the various presentations I was on the point of climbing on a horse and shooting someone in the face with an arrow.

Additionally, partnerships don’t seem to be high on the priority list. While there is some sort of upcoming agreement with Toyota on the hybrid powertrain front, Mazda seems to have little enthusiasm for a percentage ownership by a larger company that might allow for an increased R&D budget. When asked if anything similar to the previous Ford arrangement might be sought going forward, Mazda’s gurus said something to the effect of, “the future is unpredictable, but we don’t expect so.” They were scrupulously polite, but one might as well been asking them if they were hoping a disfiguring skin disease might re-appear.

Without the bankroll, Mazda’s got to box clever. It’s all very well to identify brand values, and quite frankly, it’s heartening to hear a group of enthusiastic engineers reaffirm that the Japanese Lotus still puts “fun-to-drive” at the top of their to-do list, but how do to so on a shoestring? First, streamline.

“Monotsukuri Innovation” is Mazda’s way of bundling architecture together to reduce costs. The cutaway SKYACTIV platform on display clearly showed a transmission tunnel capable of supporting an AWD variant, but the chassis was intended for next-gen Mazda3 and Mazda6 cars. With minimal changes needed to build the CX-7 and upcoming CX-5 off the same platform, weight-savings and rigidity developments should echo throughout the entire Mazda range.

Much hay has been made of Mazda’s borderline-impossible weight target for the next MX-5. With a total weight reduction of just 100kg, the SKYACTIV body and chassis don’t seem as revolutionary – until you notice that no exotic materials are involved: the savings are realized purely though better design and a moderate (20%) increase in the use of high-tensile steel.

By removing curves and kinks from the underbody, Mazda’s prototypes boast increased safety ratings with less material used. However, evidence of budget limitations can be seen in the ring-structure connecting the upper and lower body. Rather than a full stamped piece requiring a very large and expensive piece of machinery, a section of the structure is attached using structural adhesive.

The importance of an 8% weight-loss is easily dismissed, until you drive a Fiesta and a Mazda2 back-to-back. Of the two, the Mazda has the dynamic edge, and despite meagre power output remains a joy to drive. Best of all, the optimist could choose to see Mazda’s weight goals as marking the point at which safety-driven model bloat hit its apogee and we began moving towards a lighter future where 160hp four-bangers were more than merely adequate.

More than that, the SKYACTIV-chassis’s focus on driving dynamics has resulted in further improvements to handing with a quickened steering rack combined and increased positive caster. The difference in the steering is readily evident; not heavy but much more direct.

However, the realist will note that weight-loss and chassis improvements aren’t enough. Only a minor fuel-savings will be realized by the SKYACTIV chassis and body. The major difference will come from drivetrain improvements.

Don’t look for anything radical in the transmission department. With great pragmatism, Mazda has noted and rejected the cost of developing a dual-clutch gearbox, spurned the non-involving fuel-savings of a continuously terrible – er – variable transmission and gone instead for refinements of the good old auto and manual transmissions.

The changes to the manual are clever, but slight. Minor adjustments to throw-length and some weight-savings realized by trickery such as a shared input gear for first and reverse show a general improvement, but Mazda’s stick-shifts are generally quite good anyway.

It’s with the automatic tranny that Mazda’s pulled a fast one. One need only look at the mixed reviews of Ford’s six-speed dual-clutch or check the recall list on the VAG DSG to see the pitfalls of pouring money into a completely new tech. Mazda has taken what seems to be the easy route here, re-jigging the venerable automatic gearbox with a more direct feel that’ll keep the enthusiast happy.

That’s perhaps an oversimplification, but with a greater lock-up range and a modular unit containing calibrated hydraulic controls, the new 6-speed auto feels much more in tune to what your right foot is doing, particularly on tip-in.

So we have bundled development and a focus on honing simpler technologies rather than chasing pie-in-the-sky tech. Time to get back to Niinai-san and the SKYACTIV engine suite, where both ideas combine for some real-world fuel savings.

SKYACTIV-G and -D engines have, respectively, both the highest compression ratio for a production gasoline engine and the lowest compression ratio for a diesel engine. For both, the concept is the same: hybrid vehicles are all well and good, but people keep buying cars equipped with nothing more than a trusty old internal combustion engine. Even with a market shift more towards electric and hybrid drivetrains, the bulk of the vehicles on the road are still going to be ICE-equipped.

Thus, improving the combustion cycle in both diesel and gasoline applications is going to affect passenger car sales right now, especially as Mazda doesn’t appear to intend a premium charge for their SKYACTIV technology. Rather, next year’s Mazda3 will bow with a SKYACTIV-G engine and the improved transmissions as the standard equipment on mid-range models starting sometime in October.

The availability of SKYACTIV-D remains nebulous, although it could appear in some Mazda products as soon as next year. This twin-turbocharged diesel boasts improved torque from a combustion cycle that ignites much closer to top dead centre, giving a longer power-stroke. Multi-hole injectors allow for a more homogenous fuel-air mixture and the low compression ratio allows for more precise timing control.

Why doesn’t everyone run their diesel engines this way? Among other issues not outlined, Mazda’s engineers needed to overcome cold-start problems with variable valve-lift. As much as I hate the phrase, it’s a paradigm shift: the low compression means thinner con-rods and a lighter rotating assembly that revs higher; this is a diesel that redlines at (and pulls to) 5200rpm.

However, it’s the SKYACTIV-G that you’re more likely to get a chance to drive in the near future. Want some good news on the efficiency front? How does 13:1 compression and a 4-2-1 header strike you?

That’s right, moving in a completely different direction than other manufacturers, Mazda has put together a hi-po four-banger that gains 15% torque across the rev range while still getting better fuel economy. It’s a sprightly little engine and noticeably more potent at low revs.

How do they get away with a compression ratio higher than a 458 Italia in a four-cylinder that runs on regular gas? Control the burn. That header is designed to maintain consistent temperature levels in the combustion chamber, and the SKYACTIV-G features special piston cavities which allow for rapid and even flame-front propagation. Those multi-hole direct injectors are at work here again, although there’s a limit to the tech. Overseas versions will be running 14:1 compression, but North American fuel requirements dictated a detune.

The next-gen Mazda3 will only be partially SKYACTIV, lacking the chassis and body upgrades that will first be fully available in the CX-5 crossover (which you’ll be glad to note will be available with manual transmission). With this partial first wave of improvements, Mazda is reporting attaining 40mpg on the highway.

Revolutionary? The numbers don’t seem so. But it’s competitive, and the comprehensive focus that Mazda is bringing to its entire lineup shows a different strategy than that behind a low-volume halo car like the Nissan Leaf.

Let’s face it, people are going to continue to buy Mazda products based on the way they drive. If Mazda can reduce consumption to the point at which a enthusiast looking for an engaging drive doesn’t end up paying a penalty at the pump, they’ll have a success story on their hands.