The Truth About Cars » Volume http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Mon, 28 Jul 2014 11:00:04 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.1 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 editors@ttac.com editors@ttac.com (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 » Volume http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com Volkswagen Needs a New Lineup to Reach Its Goals http://www.thetruthaboutcars.com/2013/09/volkswagen-needs-a-new-lineup-to-reach-its-goals/ http://www.thetruthaboutcars.com/2013/09/volkswagen-needs-a-new-lineup-to-reach-its-goals/#comments Tue, 10 Sep 2013 11:00:05 +0000 http://www.thetruthaboutcars.com/?p=509857 Screen Shot 2013-09-05 at 12.18.20 PM

It’s time to talk about Volkswagen. You know Volkswagen: they make the Jetta, which is possibly today’s most adept compact sedan at churning out lifelong Toyota customers.

I bring up Volkswagen because I wrote a column earlier this week about Volvo, and both of those brands share something in common. Is it that they’re the only car companies that start with “V”? No, not at all. You’re forgetting about Venturi, a sports car maker that somehow went bust despite being located in the global industrial manufacturing powerhouse of Monaco.

No, the thing Volvo and Volkswagen have in common is that both automakers saw a decline in sales last month compared to August 2012. That’s bad news if you’re Volkswagen or Volvo, because the entire rest of the auto industry was up. That’s right: every other brand saw an increase. Even Rolls-Royce had a banner month, eclipsing last August’s total by a whopping five vehicles.

Anyway: the reason I bring this up is that it would seem Volkswagen is in trouble. You see, we already know Volvo is going down. That article a few months ago that said they wouldn’t live to see 2015 proves their demise is imminent, no matter how many LEDs they cram on to the front of the next XC90. So Volvo was down, and we expect them to keep being down until they wither away, leaving people in the Pacific Northwest with nothing to drive. (Don’t worry: they will find a solution that involves hemp.)

But why was Volkswagen down?

Volkswagen, for those of you who don’t know, is the world’s most sales-obsessed corporation. I know this because I’ve read perhaps 4,000 articles about Volkswagen’s obsession with some pie-in-the-sky volume goal for 2018, and I’ve never read a single article that covers any concerns they might have about, oh I don’t know, profitability. In fact, I’ve read so many stories about Volkswagen’s volume goals that you’d think they were punching each article as a retail delivery.

Because of this, I’m going to assume they don’t care about profitability, only volume, which leads me to the point of this column: Volkswagen is desperately in need of a new lineup.

I discovered this on a recent visit to Volkswagen’s website, which I highly recommend visiting if you get excited about the Futura font. Listed there, on Volkswagen’s website, in Futura Light and Future Medium and Futura Bold, is a lineup that does not, under any circumstances, represent a full-line automaker in the United States.

To understand what I mean, let’s turn to SUVs, and let’s turn to Toyota. Toyota sells, at last count, seven different sport-utility vehicles, all of which compete in different segments. I have no idea how Toyota managed to do this. Really, they created micro-segments, skillfully convincing customers that the RAV4, the Highlander, and the Venza are very different cars, purchased by very different people, and you should buy this one because it has the most dealer markup!

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Meanwhile, Volkswagen sells two SUVs. You have the Tiguan, which starts at a reasonable price until you discover it comes standard with a stick shift. Throw some options on and the Tiguan can climb to nearly $40,000, a figure also defined as “roughly 1.5 times what anyone in this segment wants to pay for a car.”

There’s also the Touareg, which starts – starts – at $45,000. Mind you, this is supposed to be Volkswagen’s competitor in the high-volume midsize SUV segment. So how does it compete? Last year, Toyota sold 121,000 Highlanders. Ford sold 128,000 Edges. Chevrolet sold 219,000 Equinoxes. And Volkswagen sold 10,553 Touaregs. Ten thousand five hundred. The Porsche Cayenne, its own sister vehicle, outsold the Touareg by roughly 50 percent.

Things aren’t very different if you turn to VW’s car lineup. Yes, they still sell the Jetta, which competes with glitter for the top spot on the “annual spending by sorority girls” list. And they sell the Passat, which is slowly becoming an acceptable midsize sedan thanks to offers like: Zero percent interest for the rest of your life!

But aside from those two, we have the Golf, which very few people buy; the CC, which even fewer people buy; and the Eos, which – this is entirely true – now starts at $36,000 without any options.

If we go back to Toyota, Volkswagen is missing out in several segments. Scion may not be a force, but it sold 74,000 units last year. The full-size Toyota Avalon accounted for 30,000 sales. And the subcompact Yaris was 31,000. But Volkswagen’s biggest loss to Toyota comes in the world of hybrids. Last year’s Prius sales? 237,000. Last year’s Jetta Hybrid sales? 162. Not thousand. One hundred and sixty two. In fairness, the Jetta Hybrid may not have been on sale the whole year – but I wouldn’t know, because I’ve never actually seen one.

And so, I repeat my point: if Volkswagen plans to hit these crazy volume goals, it’s time to get a new lineup. A few more cars; a few more SUVs. A hybrid. And maybe something made from hemp. After all, someone has to cater to those Pacific Northwest buyers once Volvo leaves.

@DougDeMuro is the author of Plays With Cars and the operator of PlaysWithCars.com. He’s owned an E63 AMG wagon, road-tripped across the US in a Lotus without air conditioning, and posted a six-minute lap time on the Circuit de Monaco in a rented Ford Fiesta. One year after becoming Porsche Cars North America’s youngest manager, he quit to become a writer. His parents are very disappointed.

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Dan Ammann Disses Deutschland’s Drive For Volume http://www.thetruthaboutcars.com/2013/05/dan-ammann-disses-volume/ http://www.thetruthaboutcars.com/2013/05/dan-ammann-disses-volume/#comments Tue, 14 May 2013 13:00:36 +0000 http://www.thetruthaboutcars.com/?p=488410 Cadillac_ATS_at_NAIAS_2012_(6677990619)

Cadillac may be gunning too hard for Germany’s domain of rear-drive sports sedans, but one area where The Standard of the World won’t be gunning for them is in the volume race. GM CFO Dan Ammann told Automotive News that unlike BMW, Mercedes-Benz and Audi, “We’re not going to be in every single segment that they’re in”.

“In some ways, I think that not having the pressure to sell the last incremental car at whatever cost … is actually not a bad place to be right now. Continuing to move down price points, and microsegmentation of all of these little categories, all seems to be driven by a sort of volume-at-all-costs mentality,” Ammann said. “What that does long term for brand health I think remains to be seen.”

Now, it’s true that Cadillac is working with a different set of circumstances than the Germans. For one, its product and sales base is much smaller than globally-integrated German luxury marques. And frankly, Cadillac should expand a little if it wants to make a real run at Europe and China. A small crossover to compete against the Audi Q3 wouldn’t be a bad idea, along with a brand new Cadillac SRX.

On the other hand, I’m glad that Ammann feels no need to pursue this strategy of going for every last niche. In the long run, I think it will do some damage to luxury brands if they keep moving too down market, as their premium position will be diluted by making the brand too accessible. Europe is plagued by a declining car market, an aging population and a lost generation of young consumers. Their auto makers have to do something to make their products accessible to the next generation. Like Jaguar Land Rover, Cadillac isn’t as exposed to these problems as Europe’s auto makers. Their big markets (the United States and China, India and the UK for JLR) have both economics and demographics on their side. Refraining from the “volume or bust” mindset is a luxury they can afford to indulge in.

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Automobile Magazine’s Must-Read Essay On The Future Of Lotus http://www.thetruthaboutcars.com/2012/11/automobile-magazine-essay-on-lotus/ http://www.thetruthaboutcars.com/2012/11/automobile-magazine-essay-on-lotus/#comments Thu, 01 Nov 2012 17:30:09 +0000 http://www.thetruthaboutcars.com/?p=465611

Ben Oliver’s essay in Automobile Magazine might be the best one I’ve read on Lotus and their existential predicament. While my own pieces are full of vitriol and cursing, Ben’s eloquent prose outlines the brand’s biggest problem; lacking the necessary volumes, they need to take advantage of economies of scale and high margins to survive as an auto maker. Sports cars that compete in the Porsche Cayman’s price range and performance envelope aren’t popular with buyers nor do they generate the volumes or profits necessary to keep an independent sports car maker afloat. The proposed option, a series of high-end sports cars built off a modular platform (similar to the Lotus-derived Aston Martin VH architecture) was met with little fanfare. The economic principles were sound, but the proposal alienated the faithful. Over to you, Best & Brightest.

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Volt Production Drops Slightly As Export Volume Ramps Up And Dealers Sell Demonstrators http://www.thetruthaboutcars.com/2011/11/volt-production-drops-slightly-as-export-volume-ramps-up-and-dealers-sell-demonstrators/ http://www.thetruthaboutcars.com/2011/11/volt-production-drops-slightly-as-export-volume-ramps-up-and-dealers-sell-demonstrators/#comments Mon, 07 Nov 2011 22:23:22 +0000 http://www.thetruthaboutcars.com/?p=417051 With all the attention being paid to Volt sales, production and turn time in the wake of recent congressional criticism, I thought I’d update our recent chart of Volt sales versus production to see how GM’s wonder car is doing a month on. As you can see, there’s not much obvious change on the year-to-date chart, with both sales and production trending upwards. But if we zoom in on the most recent months, we can see something strange happening…

This chart, showing production and deliveries since the Detroit-Hamtramck plant was retooled shows a softening of demand and a small but undeniable downturn in Volt production. Wondering why GM was trimming production of a car it says it will build 60k units of next year (including 45k units for the US market), I reached out to GM to ask about the cutback. A spokesman replied

Our 2011 target is 16000 units global production and we’re right on target. The dip in Volt production is made up by an increase in Ampera production for export.

In other words, Det-Ham isn’t making fewer Volts, they’re just building more of them with Opel badges for Europe. But what about anecdotal evidence showing that US demand for the Volt is weak? Where are the 6,000 or so Volts that have been produced but not sold this year? GM’s breakdown is as follows:

As of Oct 31 we had built roughly 10500 vehicles, sold 5000, shipped 2300 dealer demos, had over 1400 in-transit (includes roughly 300 demos) and about 1800 on dealer lots… nearly 85 percent of the 2,600 participating Volt dealers have only one or zero Volt’s in stock. Of the 1400 dealers currently with no stock, roughly half have received a Volt and sold it and half are waiting to receive their first unit.

So, 1,800 units are currently on 1,200 lots. Presumably the 1,400 in-transit” units are headed to the 1,400 lots that have no Volts for sale. And now, Automotive News [sub] reports that GM is now allowing dealers to sell demonstrator-model Volts, noting

The move will increase the number of Volts available for sale to 4,100, from 1,800… Another 1,100 units are in transit.

GM will reimburse dealers $1,500 to compensate for depreciation and for the cost of removing some decals from the demo models. Dealers must sell their demos by Jan. 3 to qualify for the payment

In other words, if demand is as strong as GM is claiming, there should be no problems selling 10k units this year. Production is rolling along and inventory is building (AN [sub] says it was at 83 days supply as of October 1); though still a long way from the volume needed to sell 45k units in the US next year, sales are still growing as well. Over the next few months supply should build to the point where Volt demand should become discernible. One downside to the demonstrator-sale strategy: dealers will be giving up what GM calls its strongest halo car, which The General says draws customers who end up leaving in a Cruze. In any case, we’re about to learn a lot more about the real level of demand for the Volt… for now, however, we’ll have to stay patient.

 

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GM: Volt Second Shift Delayed, 60k Global Units Still Planned For 2012 http://www.thetruthaboutcars.com/2011/10/gm-volt-second-shift-delayed-60k-global-units-still-planned-for-2012/ http://www.thetruthaboutcars.com/2011/10/gm-volt-second-shift-delayed-60k-global-units-still-planned-for-2012/#comments Fri, 07 Oct 2011 20:44:25 +0000 http://www.thetruthaboutcars.com/?p=414054

The Chevrolet Volt may be beating cars like the Jaguar XF and the Lincoln MKT in the sales race, but GM won’t come close to building 120,000 of the plug-ins next year as the Department of Energy was expecting. Today GM confirmed to Automotive News [sub] that it will make 60,000 Volts next year… and it will do so while remaining on a single shift. GM had previously planned to add a second shift at the Det-Ham plant late this fall, but is putting that off until midway through next year, when production of the ’13 Malibu begins there. Until then, The General is adding 300 workers to the 10-hour, four-days-per-week single shift, a move the company says

will significantly reduce costs, and has no impact on the plant’s ability to make 60,000 Volts and Amperas (the European version of the Volt) in 2012.

Think 60,000 units is still more Volt than America will buy? Well, you’re right so far, but 15,000 of those will be exported to Europe, so GM only has to sell 45,000 US-market Volts next year. Although considering the Volt won’t crack 10,000 units this year, that’s still some strong projected growth. And as usual, the union local President sums up the situation with more candor than any executive would:

The sooner the better, but I guess demand will dictate when that happens. Hopefully we’ll get a third shift someday, too.

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Get, Set, Go Forth And Multiply: Porsche Chases Volume http://www.thetruthaboutcars.com/2011/07/get-set-go-forth-and-multiply-porsche-chases-volume/ http://www.thetruthaboutcars.com/2011/07/get-set-go-forth-and-multiply-porsche-chases-volume/#comments Sun, 24 Jul 2011 09:07:08 +0000 http://www.thetruthaboutcars.com/?p=404058

Porsche and Volkswagen are the typical German couple: Not married, with children. Formally, the two want to say “Ja” once the pending lawsuits are taken care of. In the meantime, the couple cohabitates happily. CEO Matthias Müller is made from Audi-DNA. He is a confidant of Martin Winterkorn, who is Piech’s man. Müller runs Porsche like a full-fledged Volkswagen division, down to doing his share to fulfilling Winterkorn’s grand “Strategie 2018,” the plan for world domination by Volkswagen. Under Müller, Porsche doesn’t chase Nordschleife lap times. Porsche chases volume.

Yesterday, Müller told the Swiss newspaper Neue Züricher Zeitung: “By 2018, we want to more than double our sales to 200,000 units.” In the grandiose scheme of the “Strategie 2018,” which will require more than 10 million cars annually to succeed, 100,000 Porsches more is a drop in the bucket. But everybody is doing his part.

And this is how Müller wants to pull off the miracle:

  • The currently four series (911, Boxster/Cayman, Panamera and Cayenne) will be expanded to six or seven.
  • The three new ones are the Cajun, a re-release of something like the 550 Spyder, and a super sportscar which will compete with Ferrari (at homeopathic volume.)
  • Müller wants to sell an additional 30,000 units primarily in “Asia” (= China). The Panamera is planned to add 25,000 units, the Cajun is budgeted at 50,000 units. There you have your 100,000 more.
  • The number of dealers will grow from 700 to 1,000 – globally.

That was easy! Müller has big hopes for China, which he thinks will replace the U.S.A. as Porsche’s largest market as early as next year.  In China, the dealer network will grow from currently 40 to 100.

The true porschephile is close to a heart attack after reading these lines and worries about the watering down of his beloved slotcar. Not to worry, says Müller. Asked by the Swiss paper what will set a Porsche apart from the rest, Müller answered that it’s a panoply of things, such as the design, the position of seat and steering wheel, the sound, the bite of the brakes.

Now, porschephiles are REALLY worried.

 

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Nissan Leaf: The Governments Giveth And The Governments Taketh Away http://www.thetruthaboutcars.com/2010/05/nissan-leaf-the-governments-giveth-and-the-governments-taketh-away/ http://www.thetruthaboutcars.com/2010/05/nissan-leaf-the-governments-giveth-and-the-governments-taketh-away/#comments Tue, 18 May 2010 18:02:56 +0000 http://www.thetruthaboutcars.com/?p=356862

Nissan made quite a stir in EV-watcher circles by announcing that its UK-produced Leaf battery packs would cost under $400/kWh, but as we noted at the time, those numbers are being supported by various government incentives. Now, with a new government taking over number 10 Downing Street, Nissan’s UK Leaf production incentive might be on its way out. With the UK’s new Conservative-led government facing profound budget challenges (try a $240b deficit on for size), The Telegraph reports that a $30.5m grant approved by the outgoing government could fall victim to an overarching review of new expenditures by the incoming government. And that’s just the beginning…

Nissan responded to the possibility of losing these grant funds by stating its “confidence” that its Leaf manufacturing program would benefit the new government’s economic and environmental goals. Spokesfolks tell Reuters:

It is our understanding that an agreement has been made with the Department of Business, Innovation and Skills (BIS) and that the new coalition government is fully supportive of progressing a greener economy and zero emission transport will be at the heart of that. We would be disappointed if these agreements were withdrawn. The Government is fully supportive of progressing a greener economy and what Nissan is doing is at the heart of that.

Perhaps at even greater risk is a nearly $400m loan guarantee program pledged by the last government to GM’s efforts to restructure Vauxhall operations. More on that as it develops.

Meanwhile, despite apparently undercutting GM’s Volt EV in price and beating it to market, Nissan is worried that expiring EV tax credits could leave its ambitious Leaf gambit high and dry. As in the US, Nissan announced European prices for the Leaf by highlighting what the car would cost after government incentives, in hopes of improving mass-market consideration of the EV hatch.

In fact, Nissan is initially only launching the Leaf in countries that agreed to introduce credits of about $5,000 to incentivize its purchase. But, as Nissan’s Senior VP Simon Thomas tells Bloomberg BusinessWeek, those incentives won’t be around forever.

My assumption is that they won’t be cut off but they might be pared back. There’s no obligation for governments to extend those programs beyond the definitive agreement — and in some countries we don’t have a definitive agreement

Thomas points to Europe’s post-Cash-for-Clunker sales decline as an example of the kind of bubble scenario that haunts his firm. And with European governments facing huge bailout bills to keep their weaker neighbors from dragging the Euro Zone into a debt crisis, it’s safe to assume that those incentives will face fiscal pressure sooner rather than later.

The real question for Nissan is when those incentives will expire. In the short term, it will be literally dependent on them to get its European Leaf effort off the ground, as it will be shipping batteries from Japan until 2012 when production in the UK and Portugal comes online. At that point, shipping and tariff costs will be greatly reduced. Says Pierre Loing, Nissan vice president for product planning:

Between these savings, technology improvements and economies of scale as production ramps up, we should be able to avoid losing money even as incentives are phased out,

The nightmare scenario, however, is that sales drop off after incentives expire leaving Nissan with full-strength volume and insufficient demand. With Germany’s government squarely in the electro-skeptic camp, at least one of Europe’s major markets is going to be a tough nut for Nissan to crack anyway… and no wonder, considering Europe’s dirty electricity sources make EVs a less than ideal option for C02 reductions.

Meanwhile, even assuming production supports and consumer incentives remain strong Nissan has a lot of cost-control work to do. Previously, Nissan had said it would make money in the US-market based on pre-orders at incentivized rate, a statement that’s now being walked back. According to Nissan’s US sales and marketing chief Brian Carolin, that trend will take three years to bring the Lead program to break-even. He admits:

All we can say is that the program will be profitable over its life cycle

And making that happen will require even further price cuts to the already-impressive battery price structure. Bloomberg BusinessWeek reports that Nissan’s battery price target is “a lot tougher” than even the $370/kWh number it had been touting, depending on unknown factors like the scale of production and resale value for recycling. And make no mistake: production scale still is very much an unknown. Nissan reckons EVs will make up ten percent of the market by 2020, but other estimates say that number should be closer to one percent.

If Nissan has overestimated the market for its Leaf, if fiscal pressure on European governments end incentives early, if costs can’t be further reduced, and if performance problems emerge after launch, Nissan’s big gamble will collapse in a flash of hubris and underutilized production capacity. If those problems don’t materialize, Nissan could have a Toyota Prius-like advantage as the pioneer of a new era of electric vehicles. The stakes couldn’t be any higher.

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Quote Of The Day: Mo’ Volume, Mo’ Problems Edition http://www.thetruthaboutcars.com/2009/12/quote-of-the-day-mo-volume-mo-problems-edition/ http://www.thetruthaboutcars.com/2009/12/quote-of-the-day-mo-volume-mo-problems-edition/#comments Wed, 30 Dec 2009 18:15:24 +0000 http://www.thetruthaboutcars.com/?p=340389 This is the mystery man's factory...

Why should I want to be Toyota? They’re losing billions.

Today’s Quote Of The Day comes from the executive of a certain up-and-coming automaker with dreams of becoming a global player. Think you know who it is? Here’s a hint: it’s not Ed Whitacre.

Geely CEO Li Shufu is the man responsible for that little nugget of wisdom, as he gloats about his firm’s success to Bloomberg. With $334m in backing from Goldman Sachs and a stock that rose 573 percent on Honk Kong’s Hang Seng index this year, Li has good reason to be confident in his company. But confident enough to ignore the keys to Toyota’s success, which has been unmatched in the industry until about 18 months ago? Not quite. Li’s bon mot was more of a jab at archrival BYD, which has publicly stated that it intends to surpass Toyota by 2025. In fact, just a year ago Li told Gasgoo:

We would like to be a global brand just like Toyota. We will make the products at locations close to the market, and develop our models and technology in line with demand. We will produce many models at a low cost, just like Toyota.

In any case, Geely’s ability to compete with Toyota will soon be tested outside of the Chinese domestic market. In August, Geely begun production of  its first “global” model: the Emgrand EC718. As this ad unsubtly indicates, the EC718 is clearly intended to be Geely’s warning shot at the West. However, even China Daily admits that Chinese manufacturers are finding the European market a tough nut to crack, with five Chinese firms selling only 745 units in the EU in the first three quarters of 2009.

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