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 documentation 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.

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. 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.

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. 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.

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 7^th 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.

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.

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.

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.

Edmunds.com 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 Edmunds.com 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.

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.

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.

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.

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.

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.

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.

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.

The rise of the internet has had myriad effects on everyday life, not the least of which has been its profound impact on consumer behavior. With ever more data being made available online, and with the rise of independent alternative media outlets like TTAC, car buyers in particular are fundamentally changing their relationship to the car buying process. Dealers have been noting for some time that the internet has created better-informed buyers who, armed with more information, are demanding the car they want at the best possible price, wreaking havoc on traditional car dealer tactics like upselling and opaque pricing policies.

But as the eternal dance between supply and demand shifts in favor of consumers, some dealers and OEMs are having a tough time adjusting to the new reality. At the same time, the need to make money off of online consumer education has created some tension for the new breed of consumer-oriented websites. This conflict has now broken out into the open, as the auto transaction data firm TrueCar has found itself locked in a battle with American Honda over the downward pricing pressure created by more widely accessible transaction data. And the outcome of this conflict could have profound impacts on the ever-changing face of the new car market.

Early last week, TrueCar CEO Scott Painter took to the TrueCar blog with an “Open Letter To The Automotive Industry,” in which he argued

Our world is changing. Unprecedented access to information and a massive shift in consumer behavior has resulted in a challenging new automotive retail landscape. It has also enabled a consumer appetite for data transparency. To hide from evolving consumer behavior is to deny change. At TrueCar, we embrace this opportunity. We also believe that transparency is the centerpiece of trusting relationships. Some in the industry disagree.

And indeed, from personal experience I feel comfortable saying that TrueCar does provide consumers with some highly valuable information by tracking vehicle transactions from several data sources and publishing the range of transaction prices on a local level. This clearly helps consumers navigate the often opaque and confusing world of dealer-level pricing, and facilitates a more efficient interaction between supply and demand. And if that’s all TrueCar did, it would be impossible to argue with the valuable service it provides.

But in order to fund its business model, TrueCar cannot simply give away data and hope everything pans out for the best. In order to generate profits, TrueCar works with “dealer partners,” allowing them to present a lower “haggle-free” price for the model being researched at no upfront cost. If the consumer buys that car, TrueCar gets a $299 commission from the dealer; if not, the dealer pays nothing. Dealers can tailor these “guaranteed lowest prices” based on TrueCar’s data, and they seem to generally beat non-”guaranteed” prices in the TrueCar “price curve” display by only a few hundred dollars. But by offering this service to its dealer partners, TrueCar has opened itself to conflict with OEMs, as this fiscally-necessary service muddies TrueCar’s role as a pure consumer service. Which is where the conflict with Honda comes in.

In his “Open Letter,” Painter mentions no OEM by name, and TrueCar’s EVP for Dealer Development Stewart Easterby tells TTAC

 We’re not trying to pick a fight… we very much value Honda/Acura. We have strong OEM relationships through our recent acquisition of Automotive Lease Guide, and we have lots of people on staff who have work for OEMs, so we generally have strong relationships with the industry.

But in an Automotive News [sub] piece published on the same day as Painter’s “Open Letter,” the TrueCar CEO claimed that American Honda was warning dealers away from advertising below-invoice “guaranteed lowest” prices. After talking to American Honda, AN updated its piece, noting that it had

incorrectly reported that Honda singled out TrueCar.com when the automaker warned dealers that they would put their local marketing payments from Honda at risk if they offered prices below invoice on Internet shopping sites

In fact, what had happened was that American Honda had simply warned its dealers that any advertisement of below-invoice prices could jeopardize the marketing assistance money Honda sends dealerships. American Honda’s Chris Martin clarified the automaker’s position in an emailed statement to TTAC, noting

Dealers who wish to receive marketing funds are expected to adhere to certain guidelines that govern dealer participation in its Honda Dealer Marketing Allowance (DMA) Program and its Acura Carline Marketing Allowance (CMA) Program.  Among the many advertising guidelines to which dealers must adhere to in order to receive DMA/CMA Funds, Honda dealers are restricted from advertising new Honda vehicles at a price below dealer invoice plus destination and handling charges and Acura dealers are restricted from advertising new Acura vehicles at a price below MSRP plus destination and handling charges.  Such guidelines do not limit a dealer’s discretion to advertise a new vehicle at any price if the dealer is not seeking DMA/CMA Funds.  Furthermore, the dealer is free to charge customers any price it chooses, in its absolute discretion, for a vehicle.

Martin goes on to identify the central bone of contention:

The development of third party websites used for advertising is not any different than advertising pricing in a traditional newspaper or on TV.

And here, American Honda has something of a point. Whereas TrueCar’s price curve is a pure reporting tool, simply reflecting otherwise available data, it’s not entirely unfair for Honda to characterize TrueCar’s service to dealer partners as an advertising service. In practice, the only real difference between this service and any other form of advertising is that TrueCar only gets paid if a car gets sold at the “guaranteed lowest” price offered by one of its dealer partners. If you accept that reality, Honda has some very valid reasons for threatening to withhold dealer marketing assistance, as Martin’s statement explains

The function of these [DMA] guidelines is three-fold. First, it encourages dealers to use the advertising money provided by American Honda for interbrand advertising.  That is, rather than providing funds to dealers so that they can engage in discount advertising against other Honda and Acura dealers (which does American Honda and consumers no good), American Honda wants dealers to use the funds to promote the advantages of Honda and Acura vehicles when compared with competing brands. Second, discount advertising is detrimental to the Honda and Acura brand images.  American Honda has no wish to pay for ads that portray its products as “cheap” or “low-end” vehicles.  This may be appropriate for other manufacturers; it is not appropriate for the Honda and Acura brands.

So far, so reasonable. TrueCar’s service may be more palatable than the local, low-rent “Check Out Our CRAAAAZY Prices!” ads you see on TV, but in practice there’s little meaningful difference. Besides, the choice belongs to dealers: either accept Honda’s money with the inevitable strings attached, or throw in your lot with the new lower-price, but potentially higher-volume TrueCar (or CRAAAAZY Prices!) strategies. But with its third rationale for its policies, Honda strays from this reasonable territory, and betrays a distinct bias against TrueCar, arguing

Third, American Honda believes that much discount advertising is bait-and-switch advertising, which is not beneficial to the consumer and reflects badly on the manufacturer that condones it.  Dealers that advertise vehicles for extremely low prices (as some do on the TrueCar site) may engage in either direct bait-and-switch tactics or using the automobile’s brand name to sell expensive accessories, service contracts and the like.

Memo to Honda: these practices are as old as the auto industry itself. Suggesting that these tactics will never be used at dealers who toe Honda’s DMA line is just as disingenuous as the implication that TrueCar’s dealer partners are more likely to use them. If anything, TrueCar’s major sin is that it makes below-invoice advertising easier for the OEM to monitor and therefore squelch than in the pre-internet days, when consistently maintaining these DMA standards would have required a survey of every local publication and TV/radio broadcaster (not to mention direct-mail marketing), a task that no automaker was or is equipped to do.

But Honda’s apparent antipathy towards TrueCar is just the tip of a growing resentment towards the site. In a speech cited in the AN piece published last Monday, AutoNation CEO Mike Jackson expressed the angst that appears to be spreading across the auto retailing industry, especially in light of its recent deal with Yahoo [sub].

The good deal that they’re pitching to the consumer is lower than average. So to the extent that everyone goes with the TrueCar price, it moves the average down. It’s a death spiral, and the question is whether they are powerful enough to unleash that dynamic in the U.S. marketplace.

But Jackson’s implication, that TrueCar can essentially manipulate the market in favor of consumers, simply doesn’t hold up to scrutiny. On an abstract level, you can’t repeal the law the law of supply and demand. As Painter puts it

They’re trying to say Hondas are worth more than invoice, but if everybody’s paying less than invoice, that’s not true

More practically, however, TrueCar’s own data seems to refute the industry’s fears. Specifically, Easterby tells TTAC

TrueCar represents two to three percent of new car sales… we’re flattered that people think we’re influencing the market, but at that share, we clearly aren’t. The 21st C consumer demands transparency in all products and services, that’s what the web has done. TrueCar reflects the market, just as Zillow reflects the market for real estate, rather than determines it.

Even more importantly, Painter insists

Our goal at TrueCar is to foster healthier relationships between manufacturers, dealers and consumers through data transparency. To deliver on this promise, we require a high standard from our 5,800 dealer partners – an upfront competitive price and a commitment to a great customer experience. A discoverable upfront price is the cost of getting noticed. Contrary to popular concerns this does not create a “race to the bottom.” The lowest price only secures the sale 19.2% of the time within the TrueCar network. The sale is still won by location, selection and good old-fashioned customer service. [Emphasis added]

So where does this all leave us? Clearly Honda has the right to withhold DMA money from dealers violating its reasonable conditions on that money. By the same token, dealers have the choice of pursuing higher volumes with less traditional advertising by choosing the TrueCar strategy, or continuing to follow the time-honored tradition of collaborating with the manufacturer. And here, TrueCar’s price curve, which it says is not populated by dealer partner data but from independent, anonymized sources, becomes the killer app: it’s so good (reflecting a claimed 90% of all new car transactions), it can’t help but draw ever more buyers, who will then be exposed to its dealer partner “advertisements.”

Ultimately, it’s difficult not to conclude that TrueCar (and sites like it) won’t continue to draw ever more dealers away from the old DMA agreements, especially as online research becomes more important to the car-buying process and as traditional advertising dollars flow from TV, radio and print towards the internet. And if dealers and brands are sufficiently hurt by downward pressure on pricing, the alternative is always there. This is how competition works, and because TrueCar has more fundamentally aligned itself with consumers and the power of the market, it’s tough seeing them not coming out ahead in this struggle. And if they do, car buying could be changed forever. Again.

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.

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.”

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.

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…

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.

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.

NHTSA currently intends to propose standards that would be projected to require, on an average industry fleet wide basis, 40.9 mpg in model year 2021, and 49.6 mpg in model year 2025.  For passenger cars, the annual increase in stringency between model years 2017 to 2021 is expected to average 4.1 percent, and to average 4.3 percent between model years 2017 and 2025. Like EPA, in recognition of the utility requirements of full-size pick-up trucks and the unique challenges to improving fuel economy compared to other light-duty trucks and passenger cars, NHTSA intends to propose a lower annual rate of improvement for light-duty trucks in the early years of the program. For light-duty trucks, the proposed overall annual rate of fuel economy improvement in model years 2017 through 2021 would be 2.9 percent per year.  NHTSA expects to change the slopes of the fuel economy footprint curves for light-duty trucks from those in the 2012-2016 rule, which would effectively make the annual rate of improvement for smaller light-duty trucks in model years 2017 through 2021 higher than 2.9 percent, and the annual rate of improvement for larger light-duty trucks over the same time period lower than 2.9 percent.  For model years 2022 through 2025, NHTSA expects to propose conditional standards with an overall annual rate of fuel economy improvement for light-duty trucks of 4.7 percent per year

We had heard that trucks would improve their efficiency at a rate of 3.5% rather than 2.9% for the 2017-2021, and a 2022-2025 growth rate of 5% rather than 4.7%. But then, cars were supposed to improve by 5% in the 2017-2025 period, so both truck and car standards seem likely to end up lower than what the president’s report seemed to promise. But that’s not the only bad news for anyone hoping for tough fuel efficiency standards (or, good news for truck-dependent automakers)… with the release of this notice, we have an initial sense of the loopholes that will be included, and they appear to be of the hefty variety.

The first of the “key program elements” is the off-cycle credit program, which aims to

promote the early market penetration of tailpipe CO2/fuel consumption reducing technologies that are not appropriately accounted for in the current test procedure

This is typically thought to include improvements in C02 output from systems whose energy consumption or C02 output is not measured on the EPA test. According to the document

EPA and NHTSA intend to develop a minimum credit value on a subset of technologies for which we have sufficient data.  We expect this list to include at least six defined technologies, if not more.9 The total number of technologies will be dependent on the available data. In order to make use of the pre-defined credit list of off-cycle technologies, a manufacturer must utilize the technology on a minimum percentage of the company’s vehicles.  EPA and NHTSA will continue to assess the appropriate level and will propose a level in the NPRM.  The specific percentage values may vary by off-cycle technology, and will consider the applicability of the technology across vehicle type.  Under the planned proposal, the total gram/mile credit from the predefined list for any given model year would not exceed a 10 gram/mile10 impact on the company’s combined fleet average. This limit would only apply to the total for technologies where the company chooses to use the agency provided credit values. Automakers can apply for additional credits beyond the minimum credit value of listed technologies if they have sufficient supporting data.

We will, of course, have to see what technologies make it onto the EPA list, and what technologies the OEMs apply for credits with, but in general this provision makes sense. Certainly when compared to the other credit programs, it seems to be the most consistent with the stated goal of reducing fleetwide emissions by all possible means.

The second “key feature” is one of the biggest, and most objectionable of the bunch: the EV/plug-in “super credit.”

To facilitate market penetration of the most advanced vehicle technologies as rapidly as possible, EPA intends to propose an incentive multiplier for all electric vehicles (EVs), plug-in hybrid electric vehicles (PHEVs), and fuel cell vehicles (FCVs) sold in MYs 2017 through 2021.  This multiplier approach means that each EV/PHEV/FCV would count as more than one vehicle in the manufacturer’s compliance calculation.  EPA intends to propose that EVs and FCVs start with a multiplier value of 2.0 in MY 2017, phasing down to a value of 1.5 in MY 2021.  PHEVs would start at a multiplier value of 1.6 in MY 2017 and phase down to a value of 1.3 in MY 2021. 11 These multipliers would be proposed for incorporation in EPA’s GHG program.

As an additional incentive for EVs, PHEVs and FCVs, EPA intends to propose allowing a value of 0 g/mile for the tailpipe compliance value for EVs, PHEVs (electricity usage) and FCVs for MY 2017-2021, with no limit on the quantity of vehicles eligible for 0 g/mi tailpipe emissions accounting.  For MY 2022-2025, 0 g/mi will only be allowed up to a per-company cumulative sales cap based on significant penetration of these advanced vehicles in the marketplace.  EPA intends to propose an appropriate cap in the NPRM.

Regulators argue that the credit system is designed to incentivize “game changing” technology, its major result will likely be less admirable. As I argued in an earlier piece which anticipated the resurrection of the “super credit,” this loophole will encourage automakers to build the overly expensive, advanced technology “green cars” that they themselves argue consumers aren’t interested in buying, because the credits will allow them to build more profitable non-compliant pickups by offsetting their C02 output. The net result: more expensive passenger cars (which the OEMs can blame on the government regulation) and business-as-usual on the incredibly profitable  truck side of the equation. The combination of an artificial zero-C02-per-mile emission rating for EVs (in what universe is grid power carbon-neutral?) and a “multiplier” super credit was left out of the 2012-2016 standard because

EPA has concluded that the combination of the zero grams/mile and multiplier credits would be excessive.

Why? As the National Resources Defense Council argued, the credits would

undermine the emissions benefits of the program and will have the unintended consequence of slowing the development of conventional cleaner vehicle emission reduction technologies into the fleet

And because these credits are likely to be bankable, giving automakers the ability to “carry forward” or “carry back” their benefits to future or past model-years, the wiggle room is even greater. But loophole madness is just getting started…

Next up: “Incentives for “Game Changing” Technologies Performance for Full-Size Pickup Truck including Hybridization.” As if generous over-compliance credits for cars being used to offset under-compliance for pickups weren’t enough, there’s this:

The agencies intend to solicit information on technologies that offer significant increases in fuel efficiency and reduction in greenhouse gas emissions.  We intend to propose a credit for manufacturers that employ significant quantities of hybridization on full size pickup trucks, by including a per-vehicle credit available for mild and strong hybrid electric vehicles (HEVs).  This provides the opportunity to begin to transform the most challenging category of vehicles in terms of the penetration of advanced technologies, allowing additional opportunities to successfully achieve the higher levels of truck stringencies in MY 2022-2025.

The agencies intend that access to this credit is conditioned on a minimum penetration of the technology in a manufacturer’s full size pickup truck fleet, with defined criteria for a full size pickup truck (e.g., minimum bed size and minimum towing capability).  The agencies intend to propose that mild HEV pickup trucks are eligible for a 10 g/mi12 credit during 2017-2021 if the technology is used on a minimum percentage of a company’s full size pickups, beginning with at least 30% of a company’s full size pickup production in 2017 and ramping up to at least 80% in 2021.  Strong HEV pickup trucks would be eligible for a 20g/mi credit during 2017-2025 if the technology is used on at least 10% of the company’s full size pickups.

The agencies will propose specific definitions of mild and strong HEV pickup trucks, but expect to include stop/start, regenerative braking, minimum motor power, minimum battery voltage value and minimum energy storage capacity, or similar types of objective metrics.  The agencies expect that a “mild” HEV will include moderate hybridization and not just start/stop, and that a “strong” HEV will include launch assist. The agencies also intend to propose a performance based incentive credit for full size pickup trucks which achieve a significant reduction below the applicable target.  This credit could also be on the order of 10-20 gm/mile vehicle.  The same vehicle would not receive credit under both the HEV and the performance based approaches.

Now, even with the reduced improvement rate and “super credits,” there might have been some incentive for automakers to invest in smaller, more efficient pickups of the kind that have been woefully underinvested-in in recent decades. But with this provision, the message is clear: rather than incentivizing downsizing, or even offering this credit to all trucks and letting the chips fall where they may, the government explicitly wants to keep full-sized trucks on the forefront by encouraging their hybridization (despite likely market trends in the opposite direction). And apparently it never occurred to regulators that creating a higher truck standard might have led to the hybridization of more pickups anyway… but sometimes loopholes create the need for more loopholes.

Then we get to the treatment of CNG, PHEV and Flex-fuel vehicles.

EPA intends that CO2 credits for plug-in hybrid electric vehicles (PHEVs) and bi-fuel compressed natural gas (CNG) vehicles will be based on the recognition that, once a consumer has paid several thousand dollars to be able to use a fuel that is considerably cheaper than gasoline, it is very likely that the consumer will seek to use the cheaper fuel as much as possible.  Accordingly, for CO2 emissions compliance, EPA expects to use the Society of Automotive Engineers “utility factor” methodology (based on vehicle range on the alternative fuel and typical daily travel mileage) to determine the assumed percentage of operation on alternative fuel and percentage of operation on CNG for both PHEVs and bi-fuel CNG vehicles, along with the CO2 emissions test values on the alternative fuel and gasoline. EPA does not expect to extend this method to flexible fueled vehicles (FFVs) using E-85 and gasoline, since there is not a significant cost differential between an FFV and conventional gasoline vehicle and historically consumers have only fueled these vehicles with E85 a very small percentage of the time.  Therefore, treatment of E85 FFVs will continue as the MY2016 program, based on actual usage of E85 which represents a real-world reduction attributed to alternative fuels.

In the NHTSA program for MYs 2017-2019, NHTSA expects that the fuel economy of dual fuel vehicles will be determined in the same manner as specified in the MY 2012-2016 rule, and as defined by EISA. Beginning in MY 2020, EISA does not specify how to measure the fuel economy of dual fuel vehicles, and it is expected NHTSA will propose to use the EPA “utility factor” methodology for PHEV and CNG vehicles to determine how to proportion the fuel economy when operating on gasoline or diesel fuel and the fuel economy when operating on the alternative fuel. For FFVs, NHTSA expects to propose to use the same methodology as EPA to determine how to proportion the fuel economy, which would be based on actual usage of E85.  NHTSA expects to continue to use Petroleum Equivalency Factors and the incentive multipliers that are used in the MY 2012-2016 rule, however with no cap on the amount of fuel economy increase allowed.

The first half of this sounds reasonable, but when we turn to the flex-fuel credits, my anti-ethanol anger becomes to much to contain. Because ethanol offers no real environmental benefits, has numerous social and environmental costs and sucks billions of dollars in subsidies each year, all credits for flex-fuel vehicles should be cut. But even if that’s not possible, the methodology used to estimate FFV C02 output is not great. According to 2012-2016 rules

EPA will base MY 2012–2015 credits on the assumption that the vehicles would operate 50% of the time on the alternative fuel and 50% of the time on conventional fuel, resulting in CO2 emissions that are based on an arithmetic average of alternative fuel and conventional fuel CO2 emissions… the CO2 emissions value for the vehicle is calculated to be significantly lower than it actually would be otherwise, even if the vehicle were assumed to operate on the alternative fuel at all times. This represents a ‘‘credit’’ being provided to FFVs.

EPA is requiring for MY 2016 and later that manufacturers will need to reliably estimate the extent to which the alternative fuel is actually being used by vehicles in order to count the alternative fuel use in the vehicle’s CO2 emissions level determination… the default is to assume FFVs operate on 100% gasoline, and the emissions value for the FFV vehicle will be based on the vehicle’s tested value on gasoline. However, if a manufacturer can demonstrate that a portion of its FFVs are using an alternative fuel in use, then the FFV emissions compliance value can be calculated based on the vehicle’s tested value using the alternative fuel, prorated based on the percentage of the fleet using the alternative fuel in the field.

The most complex part of this approach is to establish what data are needed for a manufacturer to accurately demonstrate use of the alternative fuel, where the manufacturer intends for its performance to be calculated based on some use of alternative fuels.

In essence, the EPA will either do its own calculations on vehicle miles traveled per year for FFVs, and calculate E85 usage per VMT based on overall E85 sales. This process would have to take place every year. Alternatively, manufacturers could present their own data from demonstration studies to make an argument about what the C02 reduction actually is. In any case, the FFV system is a serious crapshoot, and though the 2016-2025 methodology may be a bit more accurate (if far more complicated), it still amounts to a credit because it doesn’t include “upstream” GHG emissions on a lifecycle basis. If the aim of CAFE is to reduce C02 output, this qualifies as yet another counter-productive loophole.

The final loophole is the most obvious: police and emergency response vehicles are exempt from CAFE. While this is very understandable in many respects, it certainly adds to the impression that government refuses to hold itself to the same standard as it holds its citizens. No surprises there, really.

Meanwhile, the mid-term review might seem like a loophole, and it’s certainly raised fears among environmental groups, but I see it simply as a safeguard. Nobody knows what the market will be like come 2025, so a review to make sure assumptions are on track makes sense for 2017. After all,

Where EPA decides that the standards are not appropriate, EPA will initiate a rulemaking to adopt  standards that are appropriate under section 202(a), which could result in standards that are either less or more stringent [emphasis added]

So, what does this all mean? Again, these details will all be hammered out before a final rule is made official in September, but it’s obvious that the 2017-2025 standard will not only be easier on trucks than cars, but it also offers huge loopholes with which automakers can offset emissions for non-compliant but high-profit trucks. Though it’s a tough standard compared to what the industry has been used to, it’s also got loopholes (like the combination of 0g/mile EV rating and “multiplier credits”) that were considered before and rejected as too lenient. The proof of the pudding though, will be in the eating. If these credits allow automakers to plan for truck sales levels that disappear under the force of rising gas prices, it could be a disaster on par with the very first round of CAFE legislation. On the other hand, if truck-heavy manufacturers continue to make huge profits due to the loopholes in this proposal, the mid-term review could be a far more feisty battle. And, if nothing else, the layers of loopholes on top of already-complex calculations prove how much more efficient it would be to simply tax gas and let the market sort the details out. Sadly though, that’s simply not an option.

Like Batman in The Dark Knight, CAFE isn’t the policy we need, but it’s the policy we deserve.

Electric vehicles present all kinds of challenges to the traditional ways of understanding cars. From design to differentiation, from range to refueling, EVs simply act different than the internal combustion-powered cars we’ve been refining for centuries now. And yet, through consumer incentives and subsidized charging stations, governments seem to be barreling headlong towards the goal of simply replacing our gas cars with electric ones, as if the two were fundamentally interchangeable. Sadly this is not the case, and a study by Project Better Place and PJM Interconnection [PDF] illustrates in stark terms just how costly an unplanned, uncoordinated rush to electric cars can be.

PJM and Better Place open their study with a question that some might find slightly absurd: what would happen if a major metropolitan area suddenly had a million EVs? The question is only absurd from a pure market perspective, as global EV sales volume projections are generally low enough to keep the possibility of a single million-EV metropolis squarely in the realm of science fiction. From a policy perspective, however, the study offers profound insights into issues that the governments who are currently promoting EVs absolutely must consider. Without an understanding of the unintended consequences of a rush to EVs, governments risk spiraling costs, misplaced investments, and market failures.

To understand the potential effects of a million-EV metropolis, PJM and Better place have created a complex computer model which

considered a distribution of 1 million EVs in the Washington-Baltimore Metropolitan Area and modeled the impact of charging the EV batteries in three scenarios: unmanaged charging, consumer-price-incentivized charging, and managed charging via a Central Network Operator (CNO).

With a million EVs in one metropolitan area, a huge percentage of grid energy would be diverted towards transportation that was once powered by gasoline, and these three scenarios represent different approaches to managing the grid impact. The first, or “unmanaged” scenario is essentially the status quo, a market-driven pricing system in which cars are simply powered off of a standard electrical grid using home chargers and the public fast chargers that some cities are already installing (called Battery Quick Chargers or BQCs). The “Time Of Use” (TOU) scenario used a two-tier pricing scenario, modeled on the pilot EV tariff developed by Southern California Edison, which uses advanced home meters to distribute energy for (theoretically) lower grid impacts and electricity prices (as well as public BQCs). The “Central Network Operator” (CNO) scenario models a single EV services provider responsible for all charging and infrastructure, using Better Place’s in-house network models and experiences. In this scenario, the BQCs are replaced by BSSs, or Battery Swap Stations, another unique Better Place offering.

Without going into too much complexity in describing the simulation (check out the PDF for more), it starts with a transportation model which maps EV distribution, trips and charging behavior. That model is then run through each of the three different scenarios, and the results of each is then sent through PJM’s grid market model and assessed for impacts on grid load and energy prices (assuming no fundamental changes in generation and transmission techniques). The results are dramatic, and graphically illustrate the problem with a vehicle-centric approach to EV stimulus.

As the very first chart in this post shows (also shown here in grey), the unmanaged scenario causes huge peaks and valleys in grid load, as commuters follow regular schedules and charge their vehicles at roughly the same times, charging them until full as soon as they are plugged in. The red line in that chart tracks “Locational Marginal Prices” (LMPs), which are at their highest when the grid faces its highest draws. This results in $786.3m in wholesale energy increases per year, a number that the TOU scenario (shown above) actually makes worse by 4%. Where TOU does help is in the annual energy costs aggregated to EV owners (thanks to fixed prices), but it is only shown to help by a mere 3.7%.

If you replace the haphazard system of home-charging and public BQCs with Better Place’s battery swap stations (BSSs) and network management system, the peaks and valleys in the grid draw are dramatically leveled out compared to the unmanaged and TOU scenarios. And though localized marginal prices are higher at times than in the TOU scenario, on aggregate they offer 22% savings compared to the unmanaged scenario. That’s over $35m annually (in one city) that’s not coming out of consumer’s pockets. More importantly, wholesale energy prices enjoy a whopping 45% savings compared to the unmanaged scenario for a staggering $350m in annual savings. Now imagine those results multiplied across every American metropolis with a million vehicles, and the impacts of not committing to a central network operator are impossible to ignore on a national policymaking level.

In essence, only a single central network operator can manage the chaos of individual transportation without restricting mobility or causing regular stress on the grid. I personally tend to favor bottom-up, market driven solutions, and at first glance putting a single operator in charge of managing the distribution of energy for private transportation does not seem to be that. But when you go through the model it becomes clear that this single central switchboard and distribution system is actually necessary for efficient market function, allowing for constant response to localized marginal prices and constant mitigation of naturally clustered usage patterns. In light of this reality, the study’s policy implications are less shocking:

This joint study firmly concludes that the increases in wholesale energy cost due to the additional load of 1 million EVs in the Washington-Baltimore Metropolitan Area can be reduced by hundreds of millions of dollars per year if the charging is managed by a CNO responding to real-time LMPs.  These savings are without considering the value from various ancillary services and of large-scale dispatchable load for increasing the penetration of renewables, economic dispatch efficiency, and heat-rates for environmental considerations.  Existing mechanisms do not necessarily allow CNOs to capture any of this value, which could be used for infrastructure deployment.  Based on these conclusions, we emphasize how critically important both the presence of real-time LMPs and of CNOs are to reducing the impacts to the electric power system.  Therefore, we recommend that incentives be developed for advancing the power system such that PRD incorporates LMPs and for EV incentives to reach beyond the consumer to CNOs so that intelligent charging networks can be quickly constructed.

By simply giving consumers credits to buy EVs, the government is setting up the same consumers to overpay massively for their electricity, grids for overstress and utilities for waste and inefficiency. Rather than encouraging these negative outcomes, perhaps governments should consider investing in Better Place’s holistic network management approach. The upfront costs of a Better Place-style CNO are indeed large, but the alternative is well-over $350m in annual increased wholesale energy costs (in one city alone)… waste without end. Throughout history economists have found so-called “natural monopolies,” in which markets are unable to provide a service as efficiently as a single actor. With the problem of EV grid management, we seem to have found another. And because the battery-swap model also fixes the major micro-level problems with EVs, namely lack of range and battery depreciation costs, Better Place is looking more and more like a no-brainer to me all the time.

The controversy over red light cameras, once relegated to websites like TTAC, thenewspaper.com, motorists.org and highwayrobbery.net, is hitting the mainstream media thanks to a new study by the IIHS [PDF here]. The study used the following methodology:

Telephone surveys were conducted with 3,111 drivers in 14 large cities (population greater than 200,000) with long-standing red light camera programs and 300 drivers in Houston, using random samples of landline and cellphone numbers. For analyses combining responses from the 14 cities, cases were weighted to reflect each city’s share of the total population for the 14 cities.

And what did they find?

Among drivers in the 14 cities with red light camera programs, two-thirds favor the use of cameras for red light enforcement, and 42 percent strongly favor it. The chief reasons for opposing cameras were the perceptions that cameras make mistakes and that the motivation for installing them is revenue, not safety. Forty-one percent of drivers favor using cameras to enforce right-turn-on-red violations. Nearly 9 in 10 drivers were aware of the camera enforcement programs in their cities, and 59 percent of these drivers believe the cameras have made intersections safer. Almost half know someone who received a red light camera citation and 17 percent had received at least one ticket themselves. When compared with drivers in the 14 cities with camera programs, the percentage of drivers in Houston who strongly favored enforcement was about the same (45 percent), but strong opposition was higher in Houston than in the other cities (28 percent versus 18 percent).

Sounds like those red light cameras are pretty great after all, doesn’t it? That’s certainly the IIHS’s takeaway…

The IIHS concludes:

Most drivers in cities with long-standing red light camera programs support cameras and recognize their safety benefits, but communities could do a better job of educating the public about the dangers of right-turn-on-red violations and the need for enforcement. Given that camera opponents frequently said cameras make mistakes, it appears communities also could do a better job of explaining the safeguards that ensure citations are issued only to drivers who clearly run red lights.

But that’s a fairly one-sided interpretation of the data, as you might expect from a body that derives its funding from the insurance industry, which in turn has a vested interest in anything that might reduce insurance payouts, regardless of other drawbacks or context. What do I mean by that? Let’s go line-by-line through the IIHS’s conclusions:

Most drivers in cities with long-standing red light camera programs support cameras and recognize their safety benefits

First of all, the data underlying this conclusion is skewed by only including respondents in cities with “long-running red light camera systems.” The only exception is one city that had red light cameras but voted them out: Houston. And despite finding stronger opposition there than in other cities with red light cameras, the IIHS is forced to concede another problematic finding: “In Houston, 53 percent of voters cast ballots against the cameras in November 2010. In the current study, however, 57 percent of the drivers interviewed said they favor camera enforcement, and 45 strongly favor cameras”).

So where are the respondents from cities that had cameras but voted them out? Where in this report can we hear the voices of the citizens of Anaheim? Or Cincinnati? Or San Bernadino? Or how about Baytown, Texas, where the fraudulent tendencies of the red light camera companies couldn’t have been more obvious? Sadly, the list goes on. The IIHS has made its point about “cities with long-standing red light camera programs,” but it’s not at all clear that this data reflects wider American sentiment.

Meanwhile, even among this selective data set, there are issues. When asked if drivers running red lights is a problem in the city, the most common answer, with 38%, was “not a problem.” The next-most popular choice, with 31.8%: “somewhat of a problem.” Furthermore, nearly 93% of respondents said they had not run a red light in the last 30 days, further indicating that the problem is rare and limited to a small percentage of the population. A more fair presentation of the data would simply state that drivers see red-light running as having high risk potential, but that they don’t see it as a common, or everyday problem. This doubtless helps fuel a major complaint about red light cameras, namely that they exist primarily for revenue generation rather than safety.

Given that camera opponents frequently said cameras make mistakes, it appears communities also could do a better job of explaining the safeguards that ensure citations are issued only to drivers who clearly run red lights.

For one thing, the fallibility of cameras was not overwhelmingly chosen as a reason for opposition. At 26.4%, it was the number one reason for opposing, but “focus is on money, not safety” was an extremely close second, at 26.1%. If anything, the need for education is not limited to “explaining safeguards,” but rather explaining the financial incentives that local governments and photo enforcement firms have to rack up as many tickets, accurate or not, as possible. After all, if 4.4 percent are saying “camera programs cost too much money,” clearly there’s a disconnect between how people view red light cameras and the reality (as red light cameras are almost always revenue positive for local governments, unless massive errors or fraud force them to return fines).

but communities could do a better job of educating the public about the dangers of right-turn-on-red violations and the need for enforcement… it appears communities also could do a better job of explaining the safeguards that ensure citations are issued only to drivers who clearly run red lights.

Too bad the IIHS hadn’t sounded the alarm on the need for pro-red light camera “education” a few months ago… Bill Kroske might still have a job. In all seriousness, the 90%+ awareness level among respondents seems to indicate that folks do know that the cameras exist… what the IIHS seems to be suggesting is that people should be indoctrinated to believe that more red lights are fundamentally good, and that these beneficent cameras never screw up. Both of these points of “education” are aimed more at propagating photo enforcement industry talking points than furthering the public good.

General Motors CEO Dan Akerson set off something of a firestorm a few weeks ago, when he said, in response to a question about forthcoming CAFE increases:

You know what I’d rather have them do — this will make my Republican friends puke — as gas is going to go down here now, we ought to just slap a 50-cent or a dollar tax on a gallon of gas.

Predictably, populists and economic alarmists of all stripes took great umbrage at Akerson’s candor, questioning his leadership of GM as well as his perspective on the shaky US economy. But Akerson is not alone in his support of some form of gas-tax increase. Bob Lutz and  Tom Friedman (an odd couple right there, if ever there was one) agree with him. Edmunds CEO Jeremy Anwyl defended Akerson and even suggested a $2/gallon tax earlier this year. Bill Ford and  AutoNation’s Mike Jackson are of the same mind as now-retired Republican Senator George Voinovich on the issue. And yet, inside the Beltway, the subject tends to draw a chuckle and a roll of the eyes. Everyone wants it, but nobody wants it.

Since the term “oil addiction” has been used to death, let’s look to an (arguably) less demeaning metaphor: vegetables. Your mother probably didn’t force you to take an honest personal inventory when she made you eat some dreaded brussel sprout or another (which is why the addiction metaphor seems better), but she would have had you not been slave to infantile instinct. So now, with our fully developed faculties, let’s consider what happens if you don’t eat your vegetables.

In the most basic sense, not increasing the gas tax is bad for America’s physical body. Our roads, which circulate the lifeblood of commerce (OK, enough with the metaphor), are literally crumbling. Again, a phrase we may have become desensitized to, but literally true. Car and Driver has a good look at the problem of America’s infrastructure woes and their link to the gas tax, the Highway Trust Fund.

The HTF is a rare beast in the political world. Usually, federal tax money goes into the general fund, where legislators first pass an authorization bill, giving guidelines about how the money can be spent, then a separate appropriations bill actually putting the money into things like buying fighter jets or paying the National Institutes of Health’s electric bill. The HTF’s authorization guarantees that all federal gas-tax revenue will only be put there. Whenever a new transportation spending bill is passed, called a reauthorization, there are slight tweaks to the HTF and how it is spent, but in general it is considered sacrosanct.

Once in the HTF, interstate money is divided according to complex formulas that take into account things such as lane-miles of road, the number of  licensed drivers, ­priority programs for things like bridge replacements, and equity provisions to ensure that every state gets a minimum (currently guaranteed at 92 percent) of their contribution back. State transportation departments, which plan, build, and maintain the interstates, decide what they want to do and then pay for it; the federal share for interstate projects is 90 percent, 80 percent if no high-occupancy lanes are built.

Now, the HTF is running out of money….To match the rate of inflation and have the same value that the 18.4-cent tax did in 1993, the gas tax  would have to be increased to 28 cents per gallon.

Safe public roads are a government outlay that all but the most extreme “Atlas Shrugged”-thumpers can get behind, especially in the wake of a rush-hour bridge collapse like the 2007 Minneapolis I-35 bridge collapse. And yet the tax that pays for our interstates hasn’t even kept up with inflation. Increasing the price of gas may hurt Americans’ mobility in the short term, but not having an interstate system is the more dire long-term alternative.

Another downside to undertaxed gasoline, which explains the broad industry support for a gas tax hike, is that America’s cheap gas makes life hell for automotive product planners. Though this might actually be good for TTAC, as it would keep us well-stocked with stories of inventory issues and mis-timed products, we’re not that selfish. Recent history teaches us that the rate of increase or decrease in the price of gas, rather than the price itself, drives the market to the extremes of high and low fuel efficiency (as evidenced by he fact that last month’s hybrid sales fell despite gas prices hitting their 2008 price levels). Industry planners would rather see the price of gasoline taxed to a state to create sustainably steady price increases, eliminating some of the speculative swings in pricing, than to plan for lower efficiency and higher profits only to be caught flat-footed by a price shock. Also, bringing US gas prices into line with the rest of the world will help US market-dependent manufacturers develop truly global products. Finally, a gas tax increase would eliminate the need for the complex, loophole-ridden CAFE regime, which industry lobbyists say “only about six people in the US actually understand.” Lutz explains:

You either continue with inexpensive motor fuels and have to find other ways to incentivize the customer to buy hybrids and electric vehicles, such as the government credits. Or the other alternative is a gradual increase in the federal fuel tax of 25 cents a year, which in my estimation would have the benefit of giving automobile companies a planning base, and giving families that own vehicles a planning base. Every time gas prices go back down, everybody starts buying big stuff again. Gas prices go up a buck, the big stuff is unsellable and everyone wants small cars. Go figure. It’s like the collective memory is about three weeks long. We can’t run a business that way.

And then there’s the issue of “externalities,” or the unborn costs of cheap gasoline. One commonly-cited “hidden cost” of cheap gasoline is the US’s huge overseas military presence. Though the link between America’s military adventures and our low price of gas isn’t always obvious, our intervention in Libya shows how expensive interventions are often undertaken out of fear of a gas price shock. Since the cost of military action isn’t built into the price of gas, this amounts to a hidden cost. Furthermore, the military’s intensive use of gasoline has a multiplying effect on those costs, forcing Pentagon planners to seek ever-greater efficiency simply to maintain existing overseas deployments.

Another there are plenty of other externalities to cheap gasoline. As Akerson points out, CAFE puts the burden of efficiency on auto manufacturers, potentially costing manufacturing jobs, at a time when the oil industry has been immensely profitable. Furthermore, as the video above shows, pollution is another hidden cost of cheap gas. Like military interventions, the cost of health problems caused by pollution is largely born by taxpayers… another “hidden cost” that some estimates place at over a trillion dollars per year.

But the final externality is one that should stop the populist resistance to a gas tax in its tracks: if we don’t pay for our gas with more money, we will do so with our privacy. Going back to  the Highway Trust Fund, we find that the only alternative to an increase in the tax itself is the “Vehicle Miles Traveled” tax, a scheme that would require the government to track every single vehicle in the United States and tax it based on the miles traveled. Though in many ways a more fair system than a gas tax alone (as it apportions costs based on use of the infrastructure, without filtering it through the efficiency level of each individual car, the VMT tax scheme is an Orwellian nightmare waiting to happen. Though privacy is not at the height of its popularity at the moment, those who oppose any increase in the gas tax would do well to consider the implications of this alternative (Who does the data belong to? Will law enforcement get access? Will others be able to track you by piggy-backing onto the system?). Especially since no other alternative is even being seriously considered.

Ultimately, the tragic truth is that there may be no way to prevent this final “alternative” to the gas tax for the simple reason that, as efficiency improves towards zero gasoline use vehicles, gas tax revenue will eventually fall away to nothing. But that horizon could be pushed out twenty years if we recognize that not even indexing the gas tax to inflation is unsustainable and if we create a long term “glidepath” of predictably-increasing gas taxes. In this scenario, our highways could be maintained, some of the externalities of gasoline use could be mitigated, and the auto industry would have the predictability to plan products that use the remaining gasoline as efficiently as possible. Moreover, the US would not be taking on any special burden in the global picture, but would simply be joining the rest of the world in paying a more realistic price for our gasoline.

Any one of these arguments could be quibbled with, but at the end of the day, opposition to any increase in the gas tax can only be justified on the fear of short-term consequences that pale in comparison to the longer-term alternatives. Like the auto bailout, sacrificing long-term principles based on short-term fears betrays a lack of faith in America’s ability to innovate its way out of challenges. What’s the principle at stake here? Market function, for one thing, which is fundamentally perverted by willfully hidden externalities. How about the historically unprecedented mobility offered by our interstate system, not to mention the ability to enjoy that mobility without government surveillance? Global equity in an increasingly multipolar world, and environmental justice are other fine principles, if you’re into that kind of thing. Oh, and did we mention America’s swamped fiscal situation that is the backdrop to all of this?

Sadly, the reason a gas tax increase hasn’t happened isn’t because people don’t understand these issues. This isn’t a problem that can be solved by op-eds like this one. Taking on this issue will require a fundamental shift in how the gas tax and gas prices more generally are seen inside the beltway, and based on President Obama’s recent decision to release strategic oil reserves, that leadership is as AWOL as ever. And with an election looming, we’re more likely to see a gas tax holiday (as we did during the last presidential election) than any proposal for an increase in gas taxes. So, what’s the solution? Instead of just verbally supporting a gas tax increase, corporate leaders like Akerson who claim the policy is in their best interests need to stop throwing up their hands at the political challenge and start putting their money where their mouth is. The ideas behind a gas tax increase are so strong, even a moderately well-funded political action committee would at least be able to embarrass a few of the craven politicians who oppose this common-sense policy. You have to start somewhere…

Editor’s note: Ladies and gentlemen, for one night only, it’s the return of Curbside Classics to TTAC. You can catch Paul Niedermeyer’s work (along with contributions from an ever expanding crew of TTAC commenters and more) on a regular basis at the new Curbside Classics site. But this piece? It just had to be on TTAC.

There’s a big difference between creating and re-creating. The proto-hot rodders of yore scoured the junk yards for new solutions, not to replicate. The competition was as much in creativity as it was pure speed. Much of that has given way to endless replication, whether it’s a perfect restoration or a 1000 hp resto-mod. But creative juices are irrepressible, and they were certainly at work here. Want a daily driver Edsel, but not its 1950′s fuel-gulping ways? The solution was just a $200 junkyard engine away. But it had to be imagined first. Now that’s creativity, and a harbinger of the future. Which is exactly what the old car hobby needs: a new model, like this “Eco-Boost” Edsel.

If there was room for a third CC logomobile at the top of our homepage, this would be it. But not just because it’s an Edsel, although daily drivers of that brand are hardly common even here in Havana, Oregon. It’s because this car actually manages to bridge the two extremes the two cars at the top of our page embody: The 1950 hot-rod Caddy represents the glorious past, but it’s hardly the thing for a run to The Laughing Planet cafe, where I found the Edsel. The 1980 Datsun 210 is a highly-practical daily driver, but a mundane living cockroach.

This Edsel is some of both, in a brilliant and refreshingly unlikely combination. In a reversal of the traditional engine swapping protocol, its heavy inefficient V8 was tossed overboard like the proverbial anchor it is, and a 1988 Ford 2.3 liter turbo four has taken up residence behind the distinctive anatomically almost-correct grille. The result is the best of both worlds: a highly unique but practical daily driver. What more could a lover of old cars ask for?

For the record, this is not the sort of mega-bucks green-washing display that appear at SEMA; this Edsel’s owner, Randall, built it on a very tight budget, and has done all the work himself. The car was found in Portland in reasonable shape, and the body got treated to a low-bucks paint job. After driving eighties FWD turbo-four Chrysler products, he wanted something more distinctive, and its hard to beat an Edsel for that. He was also hooked on a turbo-four’s unique potential for economy and performance, so the two had their unlikely encounter here.

We’re not going to recite the whole Edsel bucket-of-tears story verse-by-verse here; most of you know it well enough. Ford’s ambitious attempt to create five full divisions to go mano-a-mano against GM fell apart in 1958 when the gaudy Edsel arrived in the midst of a nasty recession. 1958 Edsels came in two distinct sizes; the smaller Pacer shared a Ford body shell, and the larger Corsair a Mercury shell.

For 1959, Edsels were decidedly toned down, and all of them shared a slightly lengthened Ford body shell. One could even get a Pacer with the 232 cubic inch six, as a delete option. But the standard engine was the old Y-block 292 cubic incher, a heavy and notoriously inefficient lumpen-element. Together with the cast-iron housing Fordomatic, there was probably close to a half ton of iron sitting over the front wheels.

And a notoriously inefficient half ton. A vintage Popular Mechanics review of a ’59 Edsel yielded 12.1 mpg (20 L/100km) on the highway and 8.5 mpg (28 L/100km) in city driving. Randall says the Eco-boost Edsel can get 24 mpg (9.8 L) in gentle driving, and 20 mpg (12 L) comes quite readily. That’s a solid 100% improvement. Or more accurately, a 50% reduction in fuel used.

Speaking of weight, this Pacer sedan was listed as weighing some 3800 lbs, which probably translates to about 4000 real-world pounds. I don’t have ready access to what a 2.3 turbo four and T-5 manual weighs, but I’m guessing about half, if not less. That made the Edsel’s sit pointed skyward. Randall’s solution:

The front was still sitting up too high so I used an oxy acetylene torch to selectively add many thousands of calories into the bottom three coils on each side. I carefully wrapped the rest of the springs with water soaked rags to help isolate heat transfer. The car is now perfectly level.

That, and lots of other details comes from one of his blog posts at eco-modder, where he describes the journey of his Edsel’s inner transformation. A reader had sent me the link some time ago, and I tried vainly to contact him, but I knew it was just a matter of time before I ran into it.

As soon as he started it, the sound was very familiar indeed: I bought a Thunderbird Turbo-Coupe in 1983, the first year for this engine. And its strengths and vices were well known to me. I could easily hit 30 mpg in the aerodynamic T-Bird. So the Edsel’s 24 mpg seems perfectly credible.

The Edsel probably weighs about 3300-3500 lbs now, a bit more than the T-Bird, but not much. But then maximum performance was not the goal here, although the Edsel is undoubtedly brisker than in its V8 incarnation. The 292 was rated at 200 gross hp, which equates to some 165 net hp. The 1988 turbo four was rated at 190 (net) hp, although it’s not quite making all of that here.

Randall purchased the engine and transmission for $200, but not all the electronics came with it. So it’s currently being controlled by a 1984 computer, and the intercooler is still missing (for now). It probably makes closer to the 145-155 hp of the earlier versions. A mega-squirt set-up is high on the wish list, but it runs quite fine in the meantime.

The Edsel’s 3.11 rear axle gearing were an obstacle, since the little four doesn’t have the low end grunt of the big V8, at least until the boost comes up. A rear end swap would have been pricey, and a new set of tires to replace the old tall 800×14″ bias ply donuts were necessary anyway, so the solution was to, once again, go against the grain. A set of low-rolling resistance 195/70 14 inchers, painted white, increased the effective ratio by 7.3%. Not quite perfect, but fifth gear is now very usable by 55 mph, and starting out on a hill no longer raises beads of sweat.

Curbside Classics is all about honoring cars still at work on the streets. And every time gas shoots up, I start worrying about finding that Mark III or some other gas hog I’ve yet to encounter. Its given impetus, along with a bit of anxiety to my documentation of the survivors. But finding this Edsel was like a giant boost to my all-too often lagging optimism: this is the way forward.

After decades of stuffing ever bigger and more powerful monster V8s into old cars, that past time has reached its obvious limits. 600 cubic inches and a 1000 hp? Sure, why not? Everybody can have their idea of fun. But if the old car hobby is going to be more accessible and affordable, not to mention drivable, than a new paradigm is needed.

The earliest hot-rodders were truly creative in their search for speed and power: GMC truck engine sixes with five carburetors. Or Buick nailhead V8s with their porting completely reversed. Writing a check for a 600 hp crate engine ain’t exactly the definition of creativity or originality.

My hat’s off to Randall and his “Eco-Boost” Edsel. It’s as good of a role model for the next generation of old-car car hobbyists as it gets. And he’s infected with me with thoughts of slipping a turbo four to slip into my ’66 F-100, and beating Ford with an Eco-Boost four cylinder full-sized truck.

Despite my fertile mental ramblings, in 1983 I certainly didn’t ever imagine that my T-Bird’s engine would someday be powering an Edsel, or mentally powering a pickup. Now it seems so obvious. That’s how paradigm shifts work; they sneak up, and suddenly they’re the next big thing. Now just watch Ford add a RWD Eco-Boost turbo four to its line of crate engines.

This piece originally appeared at www.curbsideclassic.com

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

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

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

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

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

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

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

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

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

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

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