The Truth About Cars » US market The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Tue, 29 Jul 2014 21:42:50 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » US market Blind Spot: Electric Cars And “The Freedom Thing” Tue, 28 Feb 2012 01:39:55 +0000

Editor’s note: While our erstwhile Editor-in-Chief, Edward Niedermeyer, is on sabbatical, he will continue to weigh in on automotive issues in a (hopefully) weekly column entitled Blind Spot. This is the first installment.

Back in 2008, as the worlds of automobiles and politics headed towards a dramatic collision, the founder of this site and I had a series of conversations about political perspectives on automobiles. Though these conversations were wide-ranging, I kept coming back to the same conclusion: for all of the talk about guns as “tools of freedom,” it seemed to me that cars were even more worthy of the title. After all, most people use an automobile in the pursuit of freedom and mobility every day, whereas guns are (relatively) rarely used to secure individual rights.

But embracing the car’s role as a tool of freedom raises a number of troubling questions, most of them inherent to the very cause of liberty. Though cars make us more free as individuals, we must recognize that it comes at the cost of (among other things) dependence on gasoline, an “addiction” that many now seek freedom from. As new energy sources and mobility concepts become available, citizens will have to navigate a complex thicket of issues as they seek to maximize the freedom that personal mobility offers.

That private transportation fundamentally increases personal liberty is difficult to argue against. On the theoretical level, it’s not difficult to understand how private mobility frees individuals to choose where they live and work, empowering individual choice over collective planning. And for those who see humans as essentially freedom-seeking creatures, the headlong rush towards private car ownership in developing countries could be a sign of the car’s inherently liberating power.

But as is so often the case with expanding liberty, the democratization of the automobile has a flip side. Indeed, the very expansion of the global auto market puts pressure on our energy sources, creating something of a zero-sum global market for private transportation.

Even more troubling for proponents of the car as a tool of freedom, the expansion of the global car market in developing countries is being accompanied by a transition away from automobiles in developed countries. Beyond even the impact of rising gasoline prices, social, cultural and technological conditions are making automobiles less of a liberating force in developed nations. Particularly among young people, automobile ownership is increasingly seen as a burden rather than a freedom.

For some, the answer to this automotive apathy lies in new technology, most notably in electric cars (EVs, or electric vehicles). New technology, cleaner energy sources and a more high-tech image will, argue EV boosters, make cars more relevant and sustainable to new generations of developed world consumers. But can electric cars really serve as tools of personal freedom?

On the most superficial level, EVs offer considerably less immediate freedom than gas-powered cars. Once its battery is used, an EV must sit immobile for 6-12 hours before it can drive again, limiting (if nothing else) the perception that ones car could cross a major land mass efficiently should one need it to. This gut-level reaction is, among admitted fans of freedom, a major stumbling block to the acceptance of EVs.

Add to the EV’s fundamental limitations the fact that the market for them is being stimulated by government tax dollars, and i shouldn’t be surprising that EVs have become something of a punchline on the right. After all, a gut-level appreciation for continent-crossing levels of freedom and an appreciation for the free market tend to go hand-in-hand, and the EV fails on both counts.

But by making EVs out to be nothing more than a patronage plot based on Global Warming hysteria, the political right does a disservice to both the EV and itself (however true individual accusations may be). For a significant number of Americans, the EV holds the long-term promise of an almost unheard-of level of freedom from external energy sources: what could be more enticing to the lover of freedom than the idea of local private transportation powered by solar panels on your roof? And on a national level, the hidden costs to taxpayers of gasoline dependence aren’t often brought up by the deficit hawks (or hawks of any kind, for that matter), but they are very real.

In the real world, though, microgeneration and EVs themselves are too expensive to be available to all but the most wealthy freedom freaks. And frustratingly, the most convincing solution to the EV’s problems with range and cost, namely battery lease/swap infrastructure like Better Place’s, are hardly a libertarian dream come true. Only by centralizing grid management and paying for a battery swap infrastructure, a task necessitating government involvement, do EVs make sense on a large scale.

This leaves the EV in a frustrating impasse with the value of personal liberty. Though holding profound promise for self-sustainable private transport, the range-limited, heavily-subsidized reality is as bad for many lovers of liberty as its obvious cure, the “natural monopoly” of a centralized swap/lease entity.

And yet, if we look to the markets, we see it moving toward electrification. The number and variety of hybrids available today would astound American observers of the introduction of the Prius just over ten years ago. Those who believe in the market’s wisdom can not deny the steadily increasing electrification of the car market, nor ignore its implications. And as is ever the case when technology and markets shift, those seeking to maximize their personal freedoms will have to choose carefully from a new set of imperfect choices.

]]> 146
Strong Yen Spells Big Trouble For Toyota Mon, 30 Nov 2009 18:54:45 +0000 Maybe they should have kept the price higher? (

Japans currency rose to a 14-year high against the dollar last week, prompting fears that the island nation’s exports could be dramatically affected. And no firm stands to lose as much Toyota, which had been operating under the highest assumed exchange rate of any of Japan’s auto exporters. Reuters reports that ToMoCo had pegged the rate at 90 yen to the dollar, some five yen higher than rivals Honda and Nissan. With the Yen trading at 86.29 to the dollar, that assumption could add up to big losses: Toyota reckons that for every one yen drop against the dollar, operating profits will decline some 30b Yen due to the fact that it exports over half of its Japanese-made automobiles, most of which head to market in the US. Aizawa Securities analyst Toshiro Yashinaga explains that Toyota, more than any other Japanese firm, is riding the razor’s edge.

Carmakers that issued big profit warnings last year have set cautious forex assumptions this time, so roughly speaking the current rates are within expectations. But there are views that the dollar could sink even further in 2010, to the 70s (yen), and in that sense Honda and Nissan, which are relatively strong in emerging markets, are in the winning camp

Japan’s government has thus far resisted calls to intervene in the Yen’s exchange rate. As if Toyota’s heavy exposure to the moribund US market weren’t bad enough, exchange rate uncertainty could make Toyota’s second-straight loss even worse than expected when the firm announces its fiscal year-end results in March.

]]> 28
Mercedes Benz: Smaller, Cheaper, Greener Fri, 13 Nov 2009 15:55:23 +0000 Malaisey-Benz?

Ever get the feeling that the car game is dealing with some malaise? Dieter Zetsche sure seems to. “The definition of luxury will be somewhat different,” Doctor Z tells the Wall Street Journal. “It will be fewer CO2 emissions and more modesty in appearance.” And this from the company that sells cars on the back of a brand dripping with immodesty and ostentation. But no matter, the decision has been made: Zetsche wants to chase what the WSJ terms “Americans’ growing interest in downsized models that offer upscale features and finishes.” Wait, growing interest? The MINI sells decently, but the A3 (fewer than 3k units sold year-to-date) and 1 Series (fewer than 10k units year-to-date) are hardly setting the luxury segment on fire. Damn the torpedoes, people want green modesty, and Zetsche’s going to give it to them with four compact models planned for the US sometime after 2011.

For sure, there will be another B-class, which will be pretty similar, address the same customer as the B-class today. The three other body styles clearly intend to target additional and different segments from the one that we can target today, including gender barriers.

Smaller, greener and more identity-politics-y. That sounds like just what the luxury market has been begging for! And we haven’t even started in on the cost-cutting yet.

Daimler is trying to cut $7.5b from its annual outlays, which includes cutting hours and freezing assembly worker pay as well as cutting back unneeded commercial truck capacity. But part of the cost-cutting includes the new compact architecture on which the four new US-bound premium compacts are based. Daimler admits that its a “low-cost” platform, and vehicles based on it will be largely produced in Hungary. Similarly, Mercedes is strongly considering bringing C-Class production to its Alabama plant. Zetsche tells Automotive News [sub] that currency exchange rates will make that decision for him. Exchange rates killed the last plan to bring Mercedes A and B Class compacts to the US, but Zetsche is confident that the underlying platforms and Hungarian production will be so cheap that the four compacts will still be profitable.

But profits aren’t everything to Mercedes-Benz. With Audi on a roll, and BMW expanding its lineup, Mercedes is playing catchup in a number of markets, including the US and China. Which, is where the four compacts of the Apocalypse fit in. “We certainly have a strong growth phase coming” Zetsche tells Bloomberg. The four compacts “would certainly give us faster growth than our direct competitors.” And its not just sales volume that is justifying this line of cheap (to build, not buy) compacts. Daimler has to reduce its average carbon emissions by 30 grams per kilometer by 2015, or face up to €3b in fines.

After a decade or so of stagnation, Mercedes is playing catchup. It can swaddle its ambitions in talk of redefining luxury and eco-consciousness all it wants, but the reality is is considerably more desperate. Volume must go up, costs must go down and emissions really have to go down: not the combination of dynamics that portends good things for a luxury brand. Though this will doubtless shake M-B out of its overly traditional brand image, it will be tough selling this transition as an organic expansion or redefinition of the brand. Execution of these four 2012 compacts will be crucial.

]]> 13