#Editorials

While the political battle lines over increasing CAFE standards are being drawn in Washington, with the industry taking on both environmentalists and itself, a line of analysis that’s been around since 2009 is exacerbating the industry’s internal divisions over the impact of CAFE increases. A two-year-old University of Michigan study has been exhumed and expanded upon in a new CitiGroup report which makes a bold claim: CAFE will actually improve both sales and profits for the industry. And with Detroit taking the lead in resisting CAFE increases, one might think that the industry’s “turncoats” like Toyota and Hyundai, who have made marketing-led decisions to support CAFE increases, would be the main beneficiaries of these reports. Not so. According to this battle-line-confounding analysis, the biggest beneficiary of CAFE increases will be… Detroit. Madness you say? You may well be right…

George Orwell’s warning, that “the first victim of war is the truth,” apparently applies equally to trade wars. On Friday, Senators Carl Levin and Debbie Stabenow (both D-MI) wrote the United States Trade Representative to express their concern over “reported draft regulations” of China’s New Energy Vehicle plan, noting

We are concerned that these draft regulations continue China’s long history of breaking international trade rules.

Given that the ongoing low-level trade war between the US and China, this was a predictable bit of saber-rattling. But if Levin and Stabenow’s political motivations are easy to understand, the logic that leads them to believe China’s New Energy Vehicle plan is a violation of international trade rules is not. Meanwhile, neither the Senators nor the USTR appear not to have heard about another, more serious possible trade issue arising from China’s headlong dash towards electric vehicles. Sounds like a job for The Truth About Cars…

With GM’s share price slipping below $30, the cries are going up again around the internet about the government’s stake in the bailed-out automaker. Thus far the Treasury has remained mum on its exit strategy, only indicating that it would emphasize speed rather than maximum return as it charted the course for its sell-off. But now, Reuters reports that “a big chunk” of the government’s 33% remaining stake in GM could be sold “in the summer or fall.” With the government’s shares “locked up” until May 22, that could mean the government is bailing as quickly as possible at a time when GM’s stock is hitting post-bankruptcy lows, and its CEO offers little in the way of explanations beyond blaming the Japanese tsunami and rising fuel prices. The Wall Street Journal figures taxpayers would lose $11b on its “investment” in GM equity if the government sold at today’s prices (the stock must hit $53 for break-even), but reports that political motivations outweigh fiscal considerations. The White House does not want “Government Motors” to be an issue in the next election.

Back in 1976, the Italian automaker Fiat had been badly battered by a global energy crisis and the resulting malaise infecting the global auto industry. In what Time Magazine described at the time as “a devastatingly ironic example of petropower,” Col. Muammar Gaddafi instructed his Libyan Arab Foreign Bank to invest some $415m into the Italian automaker, giving it a stake that would eventually grow to some 14 percent of the firm’s equity.

By 1986, Fiat’s Libyan stakeholders were becoming more trouble than they were worth. In the wake of the Lockerbie bombings, the US introduced sanctions on Libya, and Fiat’s Libyan connection left its attempts to bid for US military contracts (particularly those related to Ronald Reagan’s Strategic Defense Initiative) dead on arrival. As a result, Fiat and its shareholders bought back the entire 14 percent Libyan stake in the firm, presenting the Libyan Arab Foreign Bank-controlled Banca UBAE with a $3.1b check. And, according to what a Fiat spokesperson told us yesterday, that is where the story ends. But thanks to the now-ubiquitous Wikileaks, we have found that this story may in fact go farther than that. In fact, as the evidence stands right now, either the US State Department is working with bad information (which major news sources have yet to correct), or Fiat is lying about its ties to the embattled Gaddafi regime.

So, where were we?

I’d planned a road trip through West Virginia with my best friend, both of our fathers, and two Mazda RX-8s. A little over an hour in, on the way to meet the others, my father had sideswiped a tree, totaling his car. After exploring various options, I’d decided that we could and should continue on in the wrecked car. Around 2 PM Trey and his father, the judge, arrived at the revised rendezvous point in their car. The “real trip” could finally begin.

[Ed: With today’s news of NHTSA’s investigation results, we thought we’d look back at TTAC’s coverage of the Toyota Unintended Acceleration scandal.]

The Toyota Unintended Acceleration Scandal of 2010 was a curious beastie of a media phenomenon. Shortly after I started writing for TTAC, NHTSA opened an investigation into Toyota Tacomas because, as the Center for Auto Safety’s Clarence Ditlow put it,

If there were truly human error, there would be a proportional distribution across models. It’s very difficult to explain how some makes and models have higher numbers of complaints than others absent some flaw in the vehicle.

Fresh as I was to writing about the world of cars, I was sure I had the story dead to rights. I had seen this movie before, when my father told me his epic Parnelli Jones Unintended Acceleration story. Dad had even killed the the family pickup’s engine at a traffic light to prove it… and I knew how bad the brakes in the old Ford were (but that’s another story). Absent a better explanation than mere statistical likelihood, I knew there was only one cause for this problem. With a level of confidence that seems totally at odds with subsequent events, I concluded by suggesting that

the Detroit Free Press and Motor Trend blog, are trying to resuscitate the [Audi 5000] media frenzy, only this time Toyota’s to blame for people mistaking the accelerator for their brake pedal… If a TTAC reader out there has a Tacoma, perhaps they would do us the honor of standing on the brakes while mashing the accelerator for a few seconds. This should prove fairly simply that “unintended acceleration” is possible only when you are not actually on the brakes.

It was that simple… wasn’t it?

In recent years the organizers of the North American International Auto Show (NAIAS) have been especially eager to demonstrate that Detroit’s show is still relevant. Yet they crammed every OEM press conference save Volvo’s into a single day, leaving the second day for Li-ion Motors Corp., Mach 7 Motor Sports, and such. In years past there were two-and-a-half days of manufacturer press conferences, with little filler. Maybe next year everything will be back to normal?

GM and its Korean battery partner LG Chem have signed licensing agreements with the Department of Energy’s Argonne National Laboratory, giving the two firms access to Argonne’s proprietary lithium and manganese-rich metal oxide mix for use in lithium battery cell cathodes. The material will need “several years of testing” according to The General, but could extend battery life, increase charging voltages and storage, and make Li-ion cells safer. Energy Secretary Stephen Chu says GM’s agreement with the publicly-funded lab

gives General Motors the ability to use cutting-edge battery technology throughout its supply chain. The licensing of this technology will also spur the renewal of the American battery industry, creating hundreds of new jobs where they are needed most.

But that’s not quite the whole story. According to press releases, GM’s deal with Argonne allows the automaker to

to use Argonne’s patented composite cathode material to make advanced lithium-ion batteries

But LG Chem’s agreement allows the Korean firm

to make and use Argonne’s patented cathode material technology in lithium-ion battery cells

In short, a publicly-funded lab has licensed technology in a way that appears to deepen the (partially) government-owned automaker’s dependence on a foreign firm. Confused? So is the mainstream media. And so, to some extent, are we.

At least in the insular world of the automotive media, 2010 may well go down as “The Year Honda Lost Its Mojo.” The Motor Company’s first 2010 model-year launch, the Accord Crosstour failed to get off the ground last year, and the much-hyped CR-Z hybrid coupe launched to thoroughly mixed reviews. In fact, the new 2011 Odyssey seems to be Honda’s first big new launch in the US since the latest Accord debuted in 2008, although it’s not clear how many of the Oddy’s 10,147 December sales were leftover 2010 models. And after Acura’s 2009 model-year beak-ification, Honda’s luxury division launched only one new model, the ZDX, which sold a paltry 3,259 units last year. In short, Honda seems to have pulled off only one legitimate hit in its last five launches (including 2009’s Insight flop)… but unlike some other automakers, the big H isn’t dependent on novelty to move metal. Underneath Honda’s string of missteps are some fairly sound fundamentals… as well as signs that change needs to happen soon.

On the surface, GM had a fairly passable 2010, as the newly-public automaker posted a 21.3% volume increase for its four core brands. In contrast to Toyota’s humbly grateful tone, GM’s VP of US Sales Don Johnson sounded a distinctly triumphal note, arguing

Our sales this year reflect the impact of GM’s new business model. The consistency of results that we achieved demonstrates the focus on our brands, dealers and customers, and how we compete aggressively for every sale, every day.

And on a superficial level, the argument certainly seems to ring true, as Buick (+51.9%), Cadillac (+34.7%), and GMC (+31.7%) were the three most-improved brands in the business last year in terms of volume. GM also delivered more vehicles than any other automaker last year, with 2,215,227 vehicles sold. Great success, end of story… right?

Wrong.

The UAW today released its complete “Principles For Fair Union Elections” [ full PDF here], the document that it wants every transplant auto manufacturer in America to sign ahead of its organizing campaign which kicks off later this month. With so-called “card check” legislation dead in congress, the UAW hopes to shame foreign automakers who manufacture vehicles in America to guarantee certain concessions to the union that, having helped kill off its Detroit “partners,” now owns large stakes in the bailed-out successors to GM and Chrysler.

In the past the UAW has failed to organize a number of transplant factories, including Nissan’s Tennessee plants and Toyota’s Kentucky factory, and the introduction of these principles ahead of the next organization attempt signal’s the UAW’s perspective that “manipulation” by management prevented UAW organization in transplant factories. If bosses from Nissan, Toyota, Subaru, Honda, Volkswagen, BMW and Mercedes don’t sign onto these principles, they will be on the menu for the UAW’s new campaign… but are the principles worth agreeing to? Let’s take a look…

A little over an hour into our long-planned three-day West Virginia road trip, en route to rendezvous with my best friend and his father, my old man had entered a blind downhill hairpin too quickly, hit the brakes mid-turn, sideswiped a tree, and totaled his Mazda RX-8. In the past I’ve wondered what leads people to post about their unintended off-road misadventures on the Internet. Normally I wouldn’t, but this is a special case.

For five years I’d been waiting for this day to arrive. My best friend, both of our fathers, a pair of RX-8s, and the mountain roads of West Virginia. They’d been driving the cars on the flat, straight roads of Virginia Beach (where I grew up and the rest of them still live). I had been wanting them to experience how these cars were meant to be driven. Next spring my father’s RX-8 would become mine, so it was probably now or never. We opted for now.

In this third installment covering my long-sought West Virginia road trip ( part one, part two) we meet some of the local talent.

After six hours on the road I cross the Ohio River into West Virginia. New Martinsville is large enough to be ugly. And full of cars. Leaving town on WV 7/20, I’m stuck behind a half-dozen of them. Hopefully most will continue on 7 instead of 20—a glance at the nav shows the split ahead. After a few miles a passing zone finally opens up, and I take it, giving the Infiniti G37 coupe’s 330-horsepower V6 free reign, grabbing third at the redline…only to see the right turn for WV 20 flash by mid-pass. D’oh! Hit the brakes, turn around, this time successfully turn onto 20, and pass some of the same cars for a second time. A fair amount of embarrassment notwithstanding, with so much power on tap passing is effortless fun—as long as there’s a zone to do it in.

I’ve got three kids, so no M Coupe or other common object of pistonhead lust for me. Since 2003 I’ve been stuffing the brood into the back of a Mazda Protege5 while casually looking, off and on (mostly off) for a suitable three-row people hauler. Most people don’t spend six years looking for a car, but I’ve never found the right one at the right price. The right one being quite nice, since I’m picky (about cars at least). And the right price being low, because I’m cheap.