#branding

On my way home from Toronto’s trendy Queen West nightlife district, I often take the long way home, up through the newly gentrified working class neighborhoods of the city’s west end, which gives the chance to drive past a row of exotic car dealerships. A quarter mile stretch is home to Rolls-Royce, Aston Martin, Bentley, Land Rover and Lotus. The Lotus dealer formerly sold Ferraris as well, and the place was a long-time haunt when I was a child, where the only two cars in stock were a Mondial T and a gorgeous British Racing Green Esprit S4.

The same Esprit later ended up in the hands of a neighbor, a geeky looking guy who was probably in IT and also owned an Oldsmobile Eighty-Eight LSS. I had no real idea about the Esprit’s mechanical content, just that it made a fantastic racket when it would tear through the flat, straight stretches of my neighborhood – and I loved the color.

Saab’s deal with the Chinese automaker Hawtai has failed in a predictable manner, as the struggling Chinese partner apparently didn’t receive government approval for the deal. Saab-Spyker’s announcement of the deal’s collapse explains [via AN [sub]]

Since it became clear that Hawtai was not able to obtain all the necessary consents, the parties were forced to terminate the agreement with Saab Automobile and Spyker with immediate effect. The parties will continue their discussions about a possible cooperation, however now on a non-exclusive basis

This isn’t the first time that the Chinese takeover of a Western brand failed due to the Chinese government’s insistence on industry consolidation, as the Hummer-to-China deal failed for similar reasons. Meanwhile, we should have seen this coming a mile away…

One of Bertel and my favorite Chinese car blogs, ChinaCarNews, has been reporting since October than the next-generation of MG/Roewe midsized sedans would be based on GM’s Global Midsized (Epsilon II) chassis (which underpins Buick LaCrosse/Regal and the new Chevy Malibu), and now the rest of the media appears to be catching up. From InsideLine to Autocar, everyone’s running with the story that MG/Roewe, which is owned by GM’s main Chinese partner SAIC, is working on an Epsi II-based MG7 for launch in the 2015 timeframe. According to InsideLine

[In 2015], the MG7/Roewe 750 sedan replacement appears some 15 years after the debut of the Rover 75 they’re based on. A coupelike four-door, it uses GM’s Epsilon platform and will be powered by 2.0 and 2.4 four-cylinder gasoline engines and a 1.9 diesel, all with dual-clutch transmissions.

GM and SAIC signed a Memorandum Of Understanding back in October [.DOC file here], which included the provision that, in addition to developing a next-gen electric architecture,

SAIC and GM anticipate sharing an additional vehicle architecture and powertrain application in an effort to help reduce development costs and benefit from economies of scale.

This could explain MG/Roewe’s rumored use of the Epsilon II chassis, but for the moment GM dismisses these rumors as “speculation.” And no wonder: even GM hasn’t announced when it will offer a dual-clutch transmission in its Global Midsized platform. Chances are, The General will want to offer that combination before its Chinese partners use it to beef up its MG/Roewe brands, which have been in product rehab for some time now.

Detroit’s brand managers, particularly those at the resurgent premium and luxury brands, have made West Coast sales a high priority as they seek to bring new buyers into once-moribund brands like Buick and Cadillac. California, in particular, is a huge market for luxury and premium cars, and it’s generally an edgier, more youthful market that has long shunned domestic offerings. Everything from “lifestyle events” to no-cost hybrid drivetrain options on Lincoln MKZ have been introduced in an effort to get California’s copious yuppie population interested in Detroit luxury, but the results just haven’t shown up yet. According to Ford’s Mark “MKF” Fields [via AN [sub]], only about 25% of MKZ buyers were tempted by the free-hybrid deal in March, and meanwhile, the San Francisco Chronicle reports that the Golden Gate City has just lost its final domestic auto dealership, a Ford/Lincoln store. Detroit may be California dreaming, but the Buicks and Lincolns of the world are still a long way from gaining ground in the West Coast.

Saab has started paying suppliers again (although production hasn’t restarted yet), and CEO Victor Muller is once again all popped-collar confidence as he dismisses the “speed bump” that he blames on negative publicity. But behind Mueller’s yacht-club breeziness and talk of “true Saabs,” major changes are afoot in Saab’s business model. Saab’s deal with Hawtai, the product of a desperate search for support in the midst of a liquidity crisis, has changed how Muller sees the global car business, and as a result he’s shopping what may be Saab’s last meaningful asset: Western dealerships. Muller explains his thinking to Automotive News [sub]

We laughed when the Japanese came. We laughed when the Koreans came. But we will not be laughing when the Chinese come. The Chinese are like a steamroller. It took 67 years to build up our dealer network. It is the biggest asset not on our asset sheet, and these guys buy into it for free. If they make the proper cars, can you image how much simpler it will be to push product through the distribution network that is already there? It is like a railway network that is already there.

Bertel and I have a running bet about whether the first actual Chinese import to the US (not a converted glider) will be a Chinese brand or one of the western brands… but it’s not much of a bet because neither of us can ever commit to picking one brand that seems most likely to bust America’s Chinese car cherry, and our “bets” change on a weekly basis. In any case, though, think it’s safe to say that neither of us saw Saab as playing much of a role in any of the scenarios we’ve discussed.

In TTAC’s early years, we spilled much digital ink over GM’s bloated brand portfolio, wondering again and again what brands should be cut, which should move upmarket and which should move downmarket. It’s a fun exercise, but one that history has largely passed by. Not only did GM cut Saab, Hummer and Pontiac in its bankruptcy, but Chrysler has more than doubled the potential number of brands to be sold through its distribution channels, shifting the brand-clutter center of gravity towards Auburn Hills. But GM isn’t done struggling with the legacy of the Sloan system, as GM North America boss Mark Reuss tells Automotive News [sub] that GM still has at least one major branding battle on its hands: Chevy versus GMC.

We need to make sure that we drive the differentiation in the product and the price to create that separation that we know we can on GMC and Chevrolet. I don’t think we have the margin opportunity set up quite right with GMC.

Of all the barriers standing in the way of commercial success for electric cars, the “image issue” is perhaps one of the least understood. Most EV firms have embraced the distinctively Western “green consumption” trend, in which a kind of environmental asceticism drives consumer values of downsizing and ultimately self-denial. But making a conscious choice to not use gasoline and accepting whatever the market happens to offer is not a phenomenon that automakers can expect to sustain itself. If they ever want to achieve mass acceptance, EVs need an image context that goes beyond graywater recycling, “freeganism” and other highly conscious but ultimately self-denying lifestyle choices.

Racing is one obvious way to broaden EV appeal, as it highlights the positive performance aspects of EV drivetrains, but sadly no major OEM will commit to an EV racing series. Besides, racing hardly builds on the existing (if limited) green appeal of EVs. Enter the EV as disaster response vehicle. The NYT has a fantastic story about the use of EVs in rescue efforts after the Japanese quake/tsunami, when gas was largely unavailable. The story proves that EVs, far from being mere lifestyle accessories, can be hugely useful in the right circumstances. And because so many green lifestyle choices stem from a perspective of apocalyptic expectation, this story both broadens and builds on the EV’s existing appeal. Most importantly of all, pictures like the one above will do more to banish the limp-wristed, “anti-luxury” image that curses EVs than just about anything else. Just as SUV buyers would swell with pride seeing an ad image of their Explorer in off-road conditions they would never visit themselves, the image of EVs running first-responder missions in a quake-torn Japan could be of lasting significance.

There have been a number of important meetings in the auto industry over the last several years that TTAC dearly wishes it could have been a fly on the wall for, including GM’s decision to keep Opel, Fiat’s negotiations with the White House and Saab’s visit to its local payday loan store, to name just a few. But perhaps one of the more interesting boardroom battles of recent years has to be the new VW-Porsche Group’s struggle over how to brand its forthcoming mid-engine sportscar platform which first debuted as the VW BlueSport. Bertel reported last Summer that Porsche, Audi and VW were all bidding for the group’s sportscar development work, but that Porsche was likeliest to emerge with the title.

And it turns out he was right, as Auto Motor und Sport reports that VW has solved the problem by canceling Audi’s planned version of the BlueSport, leaving small mid-engine sportscar efforts in the hands of Porsche and VW. Though the decision makes the BlueSport’s branding challenge quite a bit easier (while cementing the prominence of firms related to Ferdinand Porsche at the expense of the Horch-created Audi brand), it has one less-than-ideal outcome: it removes Audi’s ability to bracket Tesla’s Roadster, a move which would have surely hurt the Silicon Valley upstart. Still, internal politics are more important than obliterating a limited-production competitor… and at least VW has its branding ducks back in one relatively orderly line.

Within weeks of becoming Editor-in-Chief here at TTAC (and through a truly unexpected twist of fate), I was given the opportunity to interview Jaguar’s head of Design, Ian Callum on the occasion of my first-ever visit to Detroit. True to our industry-centric mission, I was in town for Chrysler’s Five Year Business Plan, and to be perfectly honest, I struggled with the challenge of interviewing a chief designer, especially one who had recently rejuvenated the aesthetics of such a storied brand.

As I was fumbling through our breakfast interview, we were joined by a GM executive who happened to live at the hotel where Mr Callum was staying, and when I got the most unexpected answer of the interview, it’s safe to say this exec jumped as high out of his seat as I did. I had asked Callum what his favorite new car was, and to my complete surprise he answered “Chevrolet Stingray Concept.” That answer actually played a surprisingly important role in my subsequent career, as it earned Mr Callum and myself an invitation to GM’s Heritage Center (once we had scraped the GM exec’s jaw off the floor), where we spent three hours wandering around and taking in the best of GM’s glorious past.

Are you ready to crank some Korean crunk (see video above) and cruise the town in a long, rear-drive, V8-powered… Kia? Get ready, as Kia Motors Australia COO Tony Barolow tells drive.com.au that

We have an interest in all new models under development. A rear-wheel-drive premium sedan could be seen as a logical step from the Optima to the next level of Kia development. It is far too early at this stage to be any more precise about the car but we will definitely maintain a watching brief.

The Hyundai Genesis platform-mate has been photographed in camouflage ( click here for more Korean crunk-free images), and the rumormill has it debuting in Frankfurt this fall, or possibly the NAIAS next January. In any case, get ready for a Schreyer-styled, “proper” Kia flagship to come down the line at some point in the near future.

Hyundai’s latest Assurance marketing technique, which guarantees resale values on all 20111 model-year purchases, is already being hailed as the latest in a line of creative, zeitgeist-appropriate incentives. The one downside of guaranteeing residual values: well, people are free to draw their own conclusions from them. For example, it seems safe to say that the Azera and Accent should probably be replaced fairly soon, as their weaker resale values make them stand out from an otherwise extraordinarily consistent lineup. What’s that you say? The new Accent was announced at the same time as the resale guarantee? And an attractive new Azera replacement will be launched within a (the?) year? Er, carry on then.

In all seriousness, whenever Hyundai comes out with a new “Assurance” program, I’m sure a number of other brands look at copying elements. The genius of this latest program, however, is that it only really works if your entire lineup has been updated in a recent and consistent manner. Imagine a chart like this for certain other brands, and you’ll realize that the benefits of a strong and (possibly more importantly) consistent product line can be far reaching indeed.

They’re baaaack! Ever since Cadillac displayed its XTS Platinum Concept as a future flagship model, the brand’s lack of a range-topping super-luxo-barge has become an increasingly regular complaint. The XTS’s humble (Epsilon II platform) roots, modest proportions and general “Buick-in-Caddy-clothes” vibe led TTAC to dub it “ The Phantom Flagship,” a criticism that has echoed throughout the automotive media. The issue isn’t so much whether or not the XTS is a good luxury car, but rather the fact that even Hyundai has a more plausible large, rear-drive, V8-powered flagship in the traditional mold. With Cadillac’s products and image steadily improving, the lack of a legitimate flagship is even more glaring. Last summer, after several months of griping from Cadillac fans, rumors began to surface that GM’s then-CEO Ed Whitacre was pushing for a “proper” rear-drive flagship. Well, the rumors are back… and as before, they’re as confusing as ever. Luckily, we’ll have more than a few years to speculate about this mythical beast… so let’s get the party started.