Odds and Ends About Cars and the Car Business

By Brendan Moore

11.23. 2006

URAGUAY gets a car manufacturing plant as a result of deal between Socma SA, one of Argentina’s biggest companies, and China’s Chery Automobile. A total investment of USD $100 million will finance the plant in Uraguay, wit Chery providing 51% of the capital and Socma coming up with the remaining 49% investment needed. Ownership of the manufacturing facility is split in the same fashion. Socma says that 25,000 cars will be produced in the plant annually for the first three years, starting in 2007, and then production will be ramped up to 100,000 units per year. The plant will produce a high-end vehicle called the Tiggo, and a mass-market car called the QQ. Chery currently produces 400,000 vehicles per year and sells those vehicles in 53 countries. If you have never seen one on the road where you live, it won’t be long.

PARKING in New York City isn’t cheap – the average parking space costs $500 a month.

SPORT and utility realized together. I’m talking about the 2006 Saab 9-3 SportCombi, which is a very nice driver, and is capacious to the extreme. I spent some seat time with this wagon recently, and it’s tough to not like this car. Everything inside is laid out in typical Swedish fashion (read: just about perfectly), the seats are great for long distances, the 250 HP turbo V6 is more than willing, the brakes are wonderful, and the handling is precise on the straights, and most importantly, in the corners. The huge cargo area will swallow up just about anything, with enough space to put a lot of SUVs to shame. And this car gets an EPA-rated 28 mpg, courtesy of the excellent 6-speed automatic. It’s funny, in Europe, combis are seen as representative of a youthful, very active lifestyle. Think hang-gliding, hiking, skiing, surfing, etc. Here in the States they’re thought of as mommy-mobiles. Maybe we should go Euro on this one. Forget the big ‘ol honking, gas-sucking SUV – this is the real sport/utility vehicle.

ACCORDING to AutoCount, an Experian subsidiary, the top ten auto finance companies so far in 2006 are:
GMAC
Ford Motor Credit N.A.
Toyota Financial Services
DaimlerChrysler Financial Services
American Honda Finance
Chase Auto Finance
Nissan Infiniti Financial Services
WFS Financial
Wells Fargo Auto Finance
CitiFinancial Auto

FORD tried to buy the combined Austin-Rover in 1986, if you can believe it. And they would have bought it, too, because Austin-Rover wished to be acquired, but the British government in power at the time vetoed the acquisition at the last hour. This is probably akin to the feeling of being angry at missing your train, only to see on the news later that it went off the tracks and burned to a cinder.

IRAN has announced that Iran Khodro, the Middle East’s largest carmaker, plans to set up an auto production facility in Senegal. The plant will produce the Samand, the national car of Iran, a vehicle based on the Puegeot 405 that debuted worldwide in the early Nineties. It was only last year that the Samand replaced the Paykan on the production line in Iran. The Paykan was built for decades in Iran, and was based on the ancient Hillman Hunter, which was built in England in the Sixties and early Seventies. The Senegal factory will produce up to 10,000 units annually starting in 2008, and joint ownership of the facility will be apportioned as follows through the new SenIran Auto company: 60% owned by Iran Khodro, 20% owned by the Sengalese state, and the remaining 20% owned by a consortium of private investors. Iran Khodro states that the Samand is a much more advanced car than the Paykan, and in what must be considered a statement of the staggeringly obvious, said that it shares none of the Paykan’s parts. A statement on Iran Khodro’s website claims that the Samand has features like seat belts for all passengers, mirrors on both sides of the car, and an AM-FM cassette player.

SCOUTS were made by International Harvester from 1961 until 1980. The Scout was a short-wheelbase rugged-use vehicle built as a competitor to the Willys (later AMC) Jeep. The I-H Scout was much beloved by its owners, with an extremely strong brand image, and many people considered it to be a tougher vehicle than the Jeep, with Scout sales exceeding all Jeep sales throughout the Sixties. And a 1977 I-H Scout finished first in the 4WD Production Class in the Baja 1000, a grueling off-road race through Mexico, with the closest finishing Jeep coming across the finish line over 2 hours later. Available in 2WD and (mostly) 4WD, the Scouts came with four-cylinder engines, then sixes and eights, with the four cylinder option making a comeback in the fuel-crisis Seventies. Even a diesel engine (sourced from Nissan) was available in its last years. It was for naught as I-H made the decision to end production in the 1980 model year, citing low sales figures, and their belief that the market for these types of vehicles was slowly disappearing in the face of high fuel prices. If only they could have seen the near future, but of course, they couldn’t. Chrysler bought the rights to the Scout model name a couple of years ago, but hasn’t slapped it on anything. Yet.

BUICK sold more cars in China last month than it sold in the United States. That’s the first time it’s ever happened and it marks a milestone for Buick and GM. General Motors must be feeling the ground shift underneath them in Detroit. Many Americans are not aware that Buicks are extremely popular in China, and in fact, Buick is considered a premium brand. Buick sales increase in China every month while the brand continues to struggle here in its home market.

GOOD news if you’re in your seventies or you’re in the livery business – Ford has reversed its earlier decision to stop production of the Lincoln Town Car in 2007. Instead, Ford will move production of the vehicle to another plant and keep producing the antediluvian sedan for the foreseeable future.

CHINA had over 100 companies classified as automobile manufacturers at the start of 2006. The Chinese government is itself unsure how many companies are currently engaged in making vehicles, with some companies making as few as 50 vehicles a year, and classified on the government books as another type of manufacturing concern, i.e., bicycles, motorcycles, or even something as unrelated as washers and dryers.

THE average vehicle installment loan in the United States is now a 72-78 month loan term. In 1999, only 21 percent of new-vehicle loans were longer than 60 months, the Consumer Bankers Association says. The trend looks unstoppable with many lenders now offering 84-month loans for those who want even longer-term loans, and many of those same lenders considering adding 96-month loans to their product lineup. What does this mean in practical terms for consumers? Here’s an example: A $20,000 vehicle loan at 7.55 percent simple interest for 48 months costs the buyer $7,025 in interest. The same loan, carried over 84 months, at the same rate, costs $13,871 in interest. You can do the math – that’s almost twice as much in finance costs. And at 15,000 (average annual miles in the U.S.) miles a year, that means you have 105,000 miles on the car when you finish paying it off at 84 months (7 years x 15,000 miles), so then it’s probably time to buy a new car.

1960 saw the introduction of Chrysler’s famous Slant Six engine in the Plymouth Valiant with a gross horsepower rating of 101 ponies. The straight-sixes the company used before 1960 were awful, and Chrysler needed another engine for the happening Sixties. The development engineers leaned the engine 30 degrees to the right, leaned the transmission 30 degrees to the left, and were able to get an approximately even weight balance in this fashion, hence the “Slant Six” name. The 170 cubic inch (round off to 3 litres) production design had extremely large main bearings which meant very low engine stressing, and the Slant Six started setting testing records in performance and durability right away. These results were mirrored in the customer population, with the Slant Six getting a reputation as being an engine that you couldn’t kill, even if you abused it. Ordinary citizens would run their engines up to 200,000, 300,000 miles with regularity. And by Sixties standards it got pretty good fuel mileage as well. Increasing the size of the engine to 225 cubic inches did nothing to decrease its longevity. One thing it couldn’t do, however, was run clean enough to pass modern emissions standards. The last Slant Sixes were produced in the early 90’s for commercial vehicle use.

IN a survey of 1000 adult drivers done by Response Insurance recently, 57% of drivers in the U.S. admitted that they do not use their turn signals when changing lanes. You probably didn’t need a survey to tell you that, but here are some other interesting results from the same survey. About 7% of the drivers that eschew their turn signals say they do so because it makes driving “more exciting”. Approximately 42% of the drivers that don’t use signals state that they’re too pressed for time to use their signals, with another 23% owning up to the fact that they’re just too lazy to flick that turn signal stalk up or down. About 17% don’t use their turn signals because they’re afraid they won’t remember to turn it off (Welcome to Florida – Enjoy Your Stay!), and get this; 11% say they’re much too busy changing lanes frequently to bother with signaling. I’m pretty sure I see that guy every evening on my way home. The survey also noted that 62% of men change lanes without signaling, while only 53% of women admit to doing so. The survey has a margin of error of approximately 3%.

HYUNDAI has really done a great job with the new Sonata LX. The Sonata is finally ready for prime time. I freely admit to being one of those people that heaped scorn upon Hyundai when their cars first showed up in the United States in the mid-80’s, and I never passed up an opportunity in subsequent years to dog them some more. But facts are stubborn things, and the facts are that Hyundai makes some very nice iron now and at very competitive prices. The Hyundai lineup is strong all the way through, and deserves a look from anyone in the market for a new car. Mea Culpa.

COPYRIGHT Autosavant – All Rights Reserved

By Brendan Moore

11.20.2006

In a previous life, I worked for quite a few years as a senior manager at a couple of large auto finance companies. At one of the companies, we offered both open-end (commercial) and closed-end (consumer) leases on cars and trucks, and at the other, we offered consumer vehicle loans and consumer vehicle leases, with the portfolio split pretty evenly between the two finance products. We weren’t as large as the biggest auto finance units, but we were pretty big for the time, with almost a million units in the portfolio.

It was readily apparent to me during those stints that there were many people who would have been better off leasing their vehicle and were instead getting car loans. The reason for this hesitation on the part of consumers is no mystery; there were some serious abuses of consumers through vehicle leasing in the early 90’s because the disclosure requirements on lease contracts then were laughably weak. Many auto dealers and their F&I managers were just crushing people with lease terms that the consumer wasn’t even aware of, and usually did not find out about until it was much too late. These poor people were just getting put to sleep in the F&I office on car leases. It was really, really bad and it did not escape the notice of consumer groups and media outlets. Horror stories of people getting $1000 for their $5000 trade-in, having to pay mileage penalties of several thousand dollars upon lease termination, outlandish early termination fees, and never even knowing about it until the moment the pain was delivered – all this and more filled the airwaves and the newspapers. Consumers would sign up because the payments were lower than their loan payments would have been, never realizing that the payments should have been much, much lower. They couldn’t know the terms of the lease because the terms weren’t on the lease agreement. Very little was on the lease agreement except the vehicle description, the lease term, and the payment. And very quickly leasing developed a reputation as something you wanted to stay away from if you had any brains at all.

But, as usually happens, all of this negative press forced positive change. New regulatory requirements starting in 1995 forced vehicle lessors (the vehicle leasing companies) to disclose a great deal more information, and leasing then became fairly popular, especially since the new lease requirements happened about the same time that the average consumer was starting to look at SUVs with considerable ardor. Those SUVs were a lot more expensive than what most consumers had before, and leasing was a great way to maintain the same monthly payment and still drive something with a much pricier MSRP. Additionally, when the SUV craze first started, the manufacturers (the Big Three) couldn’t make them fast enough. Residuals were though the roof. As an example, I remember we were writing leases on Ford Explorer SUVs at the end of 1997 with 71% residuals after 36 months. Compare that to the current residual of 40% after 36 months on a 2006 Ford Explorer. This made monthly lease payments on a $35,000 SUV cheaper than lease payments on most $25,000 cars. And, of course, much, much cheaper than if you had loan payments on the same vehicle. Yeah, it was crazy, but every lessor was doing it, and if they didn’t, they could get any lease business from the dealerships. Leasing rose to 26% of all consumer vehicle financing. But, even with leasing deals that were phenomenally good for consumers, a major part of the consumer market still stayed away because their perception of leasing (read: satanic and evil) had not caught up with the reality that leasing was a pretty good deal for the consumer in many instances. By the way, leasing is still a pretty good deal for many consumers, including a sizable segment that never consider leasing as an option (more on that later).

Now, the next part of the story, the part that will tell you why there are not as many auto leasing companies as there used to be. In a matter of a couple of years, everyone started to figure out that the residuals on SUVs were way too high. Unfortunately, for the lessors, this was two years into a lease they already written for a term of 3 or 4 or 5 years. Consumers that had the leases figured out the same thing about the residual values, and didn’t exercise the option to purchase their leased vehicle at the end of the lease term, and instead, just gave back the car to the lessor when their lease was up. Suddenly the lessors were getting swamped with end-of-lease vehicles, which all had to be sold by them somehow. Since the banks and finance companies didn’t have huge used-car lots (and the requisite dealer’s license) scattered all of the United States, those returned cars, which by this time were mostly SUVs, had to go to auction. So many of the same thing showing up at the wholesale auto auctions just depressed the values of those used vehicles even further, and caused huge shortfalls from the original stated residuals on these vehicles, which in turn, wiped out any profit the lessors had made on the front end. Lessors, whether they were banks or finance companies, were sustaining massive losses, and they got out of the leasing business as quickly as possible. So, by 1999 or 2000, most lending organizations also believed the auto leasing was the work of the devil, and wanted nothing to do with it. In fact, in 2006, this hangover still hasn’t gone away for a lot of auto finance organizations. They still want nothing to do with leasing.

The combination of most consumers still being scared of auto leasing as a result of the awful things that happened in the early 90’s, and most finance organizations also being scared of leasing as a result of what happened to them in the late 90’s, saw consumer vehicle leasing drop to 14% of the market in 2003. Most consumers were wary of leasing, and if they weren’t, their choices of leasing products were limited, since so many companies had exited the business.

So, here we are at the end of 2006, and leasing has slowly climbed back up to 17.7% of the consumer auto finance market, which still isn’t much. There are still not too many lessors, but the number is increasing steadily. I am certain you enjoyed the short recent history of leasing that I delineated for you, but like most people, you are ruled by your self-interests. And your self-interests want to know, “Is leasing a better deal for me?”

The answer is, “all depends”. But here’s a start on whittling down the gray areas. These are people that unequivocally should NOT lease:

v If you keep your cars forever
v If you put lots of annual miles (30,000+) on your cars
v If you typically beat the living daylights out the vehicles you own
v If you want a new car every 12 months (or less)
v If you just can’t live with the whole concept of renting your daily transportation through a multi-year contract

Okay, so what sort of consumers should consider leasing their vehicles? Here are the people who should think about leasing:

v If you like a new car every two, three or four years and you cannot or will not pay cash for the car
v If you want/need a vehicle that you cannot otherwise afford the monthly loan payments (the lease payments will probably be quite a bit lower)
v If you typically put anywhere from 10,000 to 20,000 miles a year on your car
v If you take care of the vehicle you drive – both its appearance and mechanical condition
v If you have better than average credit – it takes a little higher FICO score to lease a vehicle than to get a loan
v If you hate hassling with whole trade-in/selling it yourself conundrum when you want another car (at the end of a lease you can just turn the car back to the lessor, and you’re done with it)

As I mentioned before, there is another sizable segment of consumers that really should take a hard look at leasing, but typically don’t. This consumer currently gets a 60-month, 72-month, or even an 84-month loan contract now on their new cars. The most popular auto loan term in the United States now is 72-78 months. The reason they get such a long term on their loan contract is to be able to afford the monthly payments. So, this average consumer (let’s call him Jimmy) gets a 72-month installment loan on a new 2007 Infiniti G35 Coupe. No problem if Jimmy loves the G35 for the next, say, 72 months (6 years). Some people see these extended-term loans to the end. But what if Jimmy gets his head turned by some new sheet metal 2 years from now? Or three years from now? Because it’s on a 72-month contract, it’s going to be a long time before Jimmy owes less on that G35 than it’s worth, so if he wants to get out early, he’s going to have to take some pain. Maybe a lot of pain. And if gas prices go up again, and more and more people want cars that don’t consume much gas, or, run on diesel, or are hybrids, or whatever, two or three years from now, that just makes the pain that much worse. Or, Jimmy’s financial situation could change in the next six years, and the monthly payment is no longer affordable. Same result as Jimmy getting his head turned by an exciting new vehicle, that is, lots of monetary pain if you want to make a change. You have probably heard people at car dealerships refer to Jimmy’s hypothetical situation as “being upside down”.

Unfortunately, Jimmy’s hypothetical situation is completely real for a lot of people. I have seen an awful lot of borrowers get as many as three or four 72-month loans in a 10 year period. They keep getting these long loans and cycling out of them early. Maybe they intend at the time of the loan to keep the vehicle until the end of the loan term or maybe they know full well they’re not going to keep it that long, but they need the lower payments regardless, so they keep getting these extended loans. They add the amount owed (the amount they’re upside-down) on their last 72-month to the new 72-month loan and away they go. Just as an aside, this all obviously gets even uglier when people have 84-month loan contracts. These are people that should be leasing their vehicles. They can get a 36-month or a 48-month lease and considerably cut down the window of possibly being upside-down in their current vehicle.

Now, when I used to ask serial “early-term” borrowers like Jimmy in consumer clinics why they don’t just lease for a shorter term and thereby decrease considerably their chances of being upside-down next time they want a new car, this was the answer I invariably got: “But then I wouldn’t own my car. I don’t want to lease my car, I want to own it”. When my staff and I would point out to Jimmy that he never really owned his car on the loan agreement until he paid it off anyway, and that he would trade it in way before he got close to paying it off, he would say, ” Yeah, but with a lease, I wouldn’t have any equity in my trade”. So, we would do the math for Jimmy and show him that he really didn’t ever get a chance to build up equity, or, if he did, that it still didn’t equal the monthly savings he could have realized on a lease for the same vehicle, he would think about that for a minute, and then say, “Well, I just don’t want to lease”.

What can you do with someone like Jimmy? Nothing, really. He just doesn’t want to change. Hey, that’s his prerogative. And, believe me; you would be astounded at how many people (millions, actually) there are just like Jimmy. But, if your borrowing behavior resembles Jimmy’s and you are open to another way of financing the car in your driveway, you might want to look at leasing. If you decide you want another car 27 months into a 36 month lease, you only have another 9 months of patience to go. Or, if your lease payout is close enough to the actual residual value at that moment, you could exercise the early termination clause of your lease agreement, pay the early termination fee (usually the equivalent of one or two lease payments), turn the car back in to the lessor, and get your wonderful new wheels. Did I mention the payments are usually lower on a lease, by the way? If you decide you want new wheels 27 months into a 72 month loan, then it’s asking an awful lot to have someone wait another 3 and 1/2 years. That’s a lot of patience to exhibit. Or, you trade the car in and take the negative equity on the chin, but, that’s never very pleasant at the dealership, either emotionally or financially.

Now, let’s talk a little bit about how to lease a car without looking like a dope, or even worse, feeling like a dope after your friend Sally or Herb or Althea reads your lease agreement after the fact and announces, “I think you got taken”. This is by no means an all-inclusive list of things to cognizant of; it’s not Leasing 101, but rather just the things people usually get hung up on when they haven’t leased before.

First of all, if you are not very familiar with the legal language of a vehicle leasing agreement, then go with a well-known lessor. It is probably prudent on your behalf to stay away from local vehicle lease companies called “Best Leasing”, “Platinum Leasing”, Bob’s Lawn Car and Auto Leasing”, and the like. It’s not that all the small leasing companies are unscrupulous, it’s just that some of them are, and I can’t tell you which ones are bad or good where you live. Whereas, the big lessors have very similar contracts with very similar terms, none of which are onerous for consumers, and anything bad that happens vis-à-vis these contracts happens at the dealership, not in the offices of the lessor. As I mentioned earlier, the amount of disclosure currently provided by large lessors is considerable.

Second, capitalization cost (cap cost) is how much the vehicle is being sold to the leasing company (lessor) for by the dealer. The dealer sells the car to the lessor, who then leases it to you. So, any cap cost reduction should show up as a subtraction from that price. Here’s an example: $1000 discount off sticker by the dealer and $2000 down from you means the cap cost goes down by $3000. If you trade a car in, whatever the trade is worth is also a cap cost reduction. When you see leasing ads with really low payments that require $5000 down, it is referred to as a $5000 cap cost reduction. Dealers do not lease cars, leasing companies lease cars. Dealers, just like when you get a loan, have a tremendous interest in making the price of that car as high as possible when it gets sold to the leasing company. That’s how they make some of their money on the transaction. The lessor doesn’t care at all how low the cap cost is; only if it’s too high. So, you still need to nail down the price of the car with the dealer. It will make a difference in your lease payments.

Third, mileage limits have tripped up an awful lot of people on leases. If you see a really low leasing payment, look at the annual mileage limits. If the annual mileage limit is 8000 miles a year and you put 15,000 miles a year on your car, just like clockwork, then that just isn’t going to work for you. Get a lease with realistic mileage limits for you personally. If the salesman or F&I manager says that 10,000 miles a year is their standard mileage allowance, and you need 15,000 miles a year, then ask how much the payment goes up with a 15,000 mile a year allowance. They (and the lessor) can easily do this, and then you can make an informed decision. DO NOT, I repeat, do not get a lease with a lower annual mileage amount than you need. It will be far more expensive to pay the excess mileage penalties at the end of the lease than for you to pay for the miles upfront when you hammer out the lease agreement.

Fourth, always ask about lease deals offered by the captive lease company, because these are sometimes great deals. Here’s an example: As I write this, Chrysler is heavily subventing their leases in the U.S., and this means that it is a very good time indeed to lease a 2006 Chrysler Corporation product. What is subvention, you might ask quizzically? When lessors subvent a lease, they typically artificially bump up the residual value of the vehicle leased, or, lower the lease finance rates, or, lower the FICO credit scores needed in order to be approved for the lease. Faced with ridiculous amounts of unsold inventory, Chrysler is employing all three methods of subvention simultaneously on their captive (through Chrysler Finance) leases, making a lease on a new 2006 Dodge, Jeep, or Chrysler very inexpensive. If you are in the market for a Chrysler product, and also want to lease, this is very much a magic moment in time. This sort of thing happens with the captive lease companies with regularity, not matter which brand you’re shopping, but particularly with the high-line brands. The luxury brands would much rather offer you a subvented lease where you can’t see all the discounting that takes place as opposed to giving you a $5000 rebate. Rebates on cars tend to diminish the value of the car in the eyes of the public since they (the public) assume you must be selling distressed merchandise if you have to pay someone to buy it. Car makers don’t want to devalue their brands if they can help it. Look at all the damage it’s done to the domestic brands over the years. It’s a lot better to offer a subvented lease, which, even though the discount may add up to the same $5000, the discounting is invisible to the consumer. When the consumer asks, “Why is this payment so low?” the salesman can say, “Well, leases work off of residuals. The higher the residual, the lower the lease payment. Our cars retain such an astounding amount of their residual value after three years that it makes the lease payments really low.” And the customer says, “Oh, okay. That makes sense. I’m glad I’m getting a car that holds its value so well”.

Lastly, look at the various fees in the agreement. There will be fees for early termination, disposition fees, excessive wear and tear, etc. The more expensive cars and the captive lessors may have a whole section of the lease agreement devoted to excessive wear and tear. Make sure you know what each fee is for, and when it would apply. Almost every contract in the United States offers GAP insurance free, but if there is a fee for it, it should be a small fee. If it’s not, go with another lessor because GAP is a necessity for you as the lessee.

That’s it, that’s all the advice you get today. My altruistic well is dry for the moment.

Just to be clear, I’m not advocating that everyone should lease their vehicles, or even that most people should lease. What I’m saying is that there are millions of people that currently get auto loans that would probably be better off with a lease instead. You may or may not be one of those people, but this is just a heads-up that if think you might be in that group; it’s worth checking out a potential lease the next time you get a new car.

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http://www.autosavant.net

By Brendan Moore

11.13.2007

In the corporate world, you’re forever doing these things called “decks”. These are presentation decks done in Microsoft PowerPoint format that you use to get across why you should spend $30 million for a new CRM platform, or why the company needs to move to a lower-cost area of the country, or how it would be a huge plus for the company to acquire a network of resellers for their core product. Stuff like that. Since some decks can run up to 70 pages (hard to believe, isn’t it?), you’re generally required to put a short “Executive Summary” section right up front so that people can read that if they don’t want to slog through the whole presentation.

I’m feeling the whole corporate thing today, and maybe you’re in a hurry, so here’s the Executive Summary on the new 2007 Saturn Aura XR: Surprisingly good in almost every aspect, great in a couple of areas, attractive looks, and is the equal (or better) of everything in its class, including the Toyota Camry and the Honda Accord. Considering how poor the previous Saturn sedans were before the Aura, GM’s leap forward with the Aura is nothing short of astounding. General Motors has finally produced an affordable family sedan that has achieved parity with the toughest competitors in the segment.

Weird, huh? Yeah, you bet. I know I was surprised. But there you have it. Here’s the long version.

The Saturn Aura XR has the higher level of equipment over the Aura XE, and believe me, the XR is the one you want. The Aura XE has the GM mainstay 3.5 liter V6 with 224 horsepower, a four-speed auto box, a lower level of trim and a base price of $20,595. It’s not a bad car; and I’m sure Saturn will roll quite a few off the blacktop, it’s just that you get a lot more car for just a little more money with the Aura XR.

The Saturn Aura XR has the fine 252 horsepower twin-cam 3.6 liter V6 from the Cadillac CTS as the means of motivation, the first application of this engine in front-wheel drive configuration. The XR gets GM’s superb 6-speed automatic transmission, a creamy, upmarket creation that also has the option of paddle shifters on the steering wheel if you’re feeling a little frisky. The XR has StabiliTrak, GM’s active stability system. And the XR has a very nice Brown Morroccan Leather Package for the interior as an option, as well as a higher level of standard equipment all around. And the base price of the Saturn Aura XR is $24,595, and loaded to the gills, it’s only a little over $27 thousand.

After driving the Aura XR for a few hours, here are some things I noticed pretty quickly:

Price point is excellent, and should give the other cars in this market category a tough time of it on a price/value comparison.

Very, very quiet for the segment – seems more expensive than it is in that regard.

Interior lighting is very well done.

Usual dead spot in the middle of the steering typical on GM cars seems to have gone away. It’s like a Christmas Miracle!

More fun to drive than a Toyota Camry or a Honda Accord, and not as much fun as the VW Passat, Mazda 6, or the Ford Fusion, but pretty damn close. More fun as you go faster, which is the opposite of the Camry and the Accord, and right in there with the Passat, the 6, and the Fusion. Great on-road manners.

A-pillar windshield frame on driver side seems thicker than it actually is – it took a little while for me to start “seeing” through it.

Engine is finally a match for the V6 offered by Honda-Nissan-Toyota in everything I could feel and hear – torque, horsepower, powertrain noise, sophistication, and smoothness.

The six-speed auto is excellent, but here’s a minor quibble: when you use the paddle shifter, the odometer and trip odometer go away.

Fit and finish inside looks very tight, with good gaps and shut lines. Outside, I really like the side view, love the rear 3/4 view, the rear view, and the front is kind of standard design. Overall the look is sophisticated in an understated European way.

The Saturn Aura XR and Aura XE both have a 5-star rating in the crash tests. The Aura XR gets an EPA-rated 20 mpg in the city and 28 mpg on the highway.

As I mentioned in the beginning of this review, the new 2007 Saturn Aura XR is a definite contender with some real character in this segment, and should not be overlooked if you’re considering one of the other cars in this hotly-contested part of the market. And, really, if GM can get potential buyers like you to just go and drive the car, they will make their sales projections easily, and for a change, it won’t be through rebates or special financing, it will be as a result of selling a car that’s as good or better than the competition. Now, I am a realist – that’s easier said than done, and GM has no one but themselves to blame for this predicament. They sold the American public mostly crap for 25 years, so there is no small amount of ill will among the public for GM to overcome. But, here’s the deal: you’re only hurting yourself if you don’t put this one on your list. It’s a very good, and a very honest car at a very good price.

COPYRIGHT Autosavant – All Rights Reserved

Odds and Ends About Cars and the Car Business

By Brendan Moore

11.10.2006

BRAZIL doesn’t get a lot of ink here in the United States in terms of it’s auto market, but a lot of car manufacturers sell a substantial amount of vehicles there, including some small domestic car companies you may not have heard of, but are well known in-country despite being very low-volume producers. One such company is Troller, which makes approximately 100 vehicles a month, and produces only two models; a small, tough 4WD named the T4 which is based on the original Willys Jeep, and a pickup truck called the Pantanal. And now Troller (full name Troller Veiculos Especias) has announced that it is currently in discussions to sell itself to Ford, a market giant in Brazil. The deal is not done, and in fact, may not get done, but it interesting that Ford would see value in acquiring such a small producer, albeit one with a strong positive brand.

CHRYSLER is subventing their leases like crazy in the U.S., and this means that it is a very good time indeed to lease a 2006 Chrysler Corporation product. When lessors subvent a lease, they typically bump up the residual value of the vehicle leased, or, lower the lease finance rates, or, lower the FICO credit scores needed in order to be approved for the lease. Faced with ridiculous amounts of unsold inventory, Chrysler is employing all three methods simultaneously on their captive (through Chrysler Finance) leases, making a lease on a new 2006 Dodge, Jeep, or Chrysler very inexpensive. If you are in the market for a Chrysler product, and also want to lease, this is very much a magic moment in time.

GEELY of China has made another acquisition of another venerable British company. This time it’s Manganese Bronze Holdings Plc, which produces the familiar black London taxicabs. Geely paid $54.3 million for a controlling interest and two board seats in the company, which will be disbursed by way of Geely investing the same amount in a joint manufacturing facility in China, and giving 48% ownership of this joint venture to Manganese. Geely, which also bought MG and the some of the tooling for now defunct Rover last year, said that it intends to make the taxicabs in China for the purpose of both domestic and international sales. Geely also announced recently that it will produce the MG line of automobiles in a not-yet-built manufacturing plant in Ardmore, Oklahoma, starting in 2010.

GM launched four new Cadillac models in China on November 10, and said in a press release that they expect the luxury car market there to grow to 300,000 units annually by 2010. These are heady times for GM in China, with nothing but good news and good numbers every month. While production is cut back in the U.S., the China market is growing at breakneck speed, with GM owning five vehicle manufacturing plants, an engine factory, a growing consumer finance company, and GM dealerships springing up everywhere.

TURKEY is where you can buy a 2007 DeSoto, except that it’s a truck, and a big one at that. It’s a long story, but the short version is that Askam Kamyon Imalat ve Ticaret A.S, the manufacturing company had a deal with Chrysler in the 50’s to make, sell and distribute Chrysler products, which a little later (60’s and 70’s) included AMC which included Rambler, Willys, Desoto, etc. and so the company in Turkey had a lot of brand names to choose from when selling their cars and trucks. The company made trucks under the DeSoto name. When the Daimler-Chrysler merger happened in 2002, Chrysler dissolved the joint venture, took all of their current brands and set up their own company in Turkey. The DeSoto brand stayed behind in the deal, and is still used on new trucks today.

SMART says it will be profitable in 2008. The redesign of the ForTwo model will cut production costs by 25%, says the company, and the additional sales expected as a result of the Smart ForTwo availability in the United States will combine to put Smart in the black, a place it’s never been in its history, despite selling over 750,000 cars in the past eight years of production. The Smart ForTwo is expected to be available for sale in the U.S in early 2008 calendar year.

FORMER aerospace CEOs seem to be popular replacements at car companies now. The former boss of Airbus, Christian Streiff, has been named as the new CEO of PSA/Peugeot-Citroen. Sales at the auto maker have settled in at around 3.3 million units, which is a long way from the goal of 4 million units in 2006, which was set in 2002. The previous CEO, Jean-Martin Folz, is credited with some operational improvements, a renewed emphasis on design, and better financial oversight, but none of these incremental improvements were enough to move the sales needle enough in the right direction. Now it’s Streiff’s turn.

TOYOTA has bought 5.9% of Isuzu for $373 million. Toyota wishes to leverage Isuzu’s expertise in trucks and diesel engines with an eye towards producing a possible diesel hybrid engine in the near future. Such an engine would be everything a gas hybrid is, except more so, with even better fuel mileage. Toyota seems to do OK shopping in GM’s bargain bin – first they bought a controlling interest in Subaru after GM cut their Japanese affiliate loose, and by all accounts, got a good deal. Toyota now buys a stake in struggling Isuzu, at what appears to again be a bargain price.

IN what may or may not be the first sign of the coming Apocalypse, car manufacturers are now marketing directly to children in an effort to get those future entry-level young buyers first, and, to exercise influence over the current buying decisions of adults by using their children as proxies in the marketing wars. Jennifer Saranow writes in the Wall Street Journal that the car companies are actively marketing to children as young as pre-school age through various methods, including McDonalds Happy Meals, online communities, print posters at schools, and of course, the tried and true children’s television programming.

VOLVO has a new car coming out next year called the C30. The new model is a good-looking (and different-looking) hot 218 HP hatchback that promises to give the VW GTI a run for its money in the U.S. marketplace. Volvo has set conservative sales goals for the C30 (fully and completely loaded at $26,000), forecasting only 6000 units going across the curb in the first year. After looking at the car, and looking at the performance/luxury/safety specifications of the car, I would say they’ll crack 6000 units pretty easily.

HONDA has developed a diesel engine that runs much cleaner than current diesels and meets future emissions requirements now. As an example, it meets the emissions and particulate requirements of all 50 states in the U.S., even the very tough California requirements. The engine has excellent power per liter and is considered internally at Honda to have the same sort of importance as the giant leap Honda made with the CVCC engines of the 1970’s. Expect to see these engines very, very soon.

LANCIA is ready for its close-up. Once on death’s door, Lancia is being treated with respect once again by Fiat, its parent company, and the commensurate funding for new models that respect brings. Fans of the storied badge can expect to see wonderful new models with the wonderful old names of Delta, Aurelia, and Fulvia, and Fiat’s internal projections show production of over 300,000 units under the Lancia name by 2011. It is not known whether the marque will be blessed with a rear-wheel drive platform for the high-end offerings, but Lancia fans are hopeful that this will occur, since a RWD platform loan from extended family member Maserati could be easily managed at some point.

IN California, I have noticed that people are having their clear OEM bulbs taken out of the fog light/driving light assemblies and replaced with yellow bulbs. The clear OEM lens remains with yellow bulb inside. I talked with some of these (20-something) guys, and from their point of view, this accomplishes two things; 1) it gives their vehicle a distinctive front look when the lights are on, and 2) they gain greater lighting efficiency in fog conditions since they believe the yellow light results in less reflection off the fog. Obviously the first reason is more important, with the second reason a rationalization, but a good rationalization always helps when you change something on your car. Besides, they are not alone in that point of view – many vehicle lighting engineers believe that yellow light is much better in fog conditions for the same reason, that is, it reflects less than a clear bulb. This change mimics the factory look of many sports cars and luxury cars from the 70’s, 80’s and early 90’s, i.e., Mercedes-Benz, Acura, Ferrari, etc., and I must say, is attractive to these eyes. Since trends like this tend to start on the West Coast and go east, you have now been given the early heads-up.

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11.01.2006

The Tatra automobile was produced in

what is now the Czech Republic and previously part of Czechoslovakia, starting in 1898 and ending in 1998. Both passenger cars and heavy trucks were manufactured during this time, with only truck production continuing after 1998. Unless you lived in Central Europe, there’s a good chance you have never heard of a Tatra automobile and an even better chance that you have never seen one in person.

 

Tatras were engineering marvels in their day, particularly when the cars started offering powerplants that consisted of rear-mounted, air-cooled V8 engines in a lightweight streamliner body, first seen in the T 87 model in 1946.

This was followed by the equally fascinating Tatra 603 in 1956. The looks of the 603 were unique then and would be considered wildly eccentric now (as an example, a Tatra 603 is the car driven by Jim Carrey’s character in the Lemony Snicket movie). And of course, it had an updated version of the rear-mounted, air-cooled engine, now with 192 horsepower.

1997 Tatra 770

In 1996 the 613 was shaped into the T700 by British designer Geoff Wardle (now at Pasadena Art Center College of Design) and introduced to the press at the Hilton Hotel in Prague. But it was all too little too late, despite having 300 horsepower available in performance versions, and in 1998 car production ceased. One hundred years of unusual cars with real character had come to an end.

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Odds and Ends About Cars and the Car Business

Brendan Moore

11.01.2006

NOT so long ago (just last year), both General Motors and Fiat were possible candidates for bankruptcy. The companies were both sick financially and auto analysts were preparing for their funerals. Now both companies look much stronger, and in fact, seem much better off than many of their competitors in their respective markets. How things change in the car business.

HOLDEN of Australia has introduced their new RWD platform via the new Monaro. The new platform meets all U.S. safety requirements, and it’s a safe bet that it will be used as the underpinnings for the new Chevrolet Camaro, the new Pontiac GTO, and possibly a new Chevrolet Caprice or Chevrolet Impala in the States. Holden also plans to export models using this platform to China and the Middle East.

ENGLAND has an estimated 6000 speed cameras in operation on their roads at this time.

SCION sales are booming in America, so much so that Toyota dealers that carry the Scion youth brand are running out of room for the cars. Scion was supposed to require a small part of an average Toyota dealership and instead is outgrowing their allotted space in leaps and bounds. Speaking of which, just as an aside, if you test drive a Honda Element (which is a very good example of the cube car) and then test drive a Scion Xb, you will almost always buy the Scion. It’s the best in its admittedly small market niche. But even this market niche is getting another player – Nissan has made it clear they’re bringing their cube-on-wheels to the United States, called, appropriately enough, the Nissan Cube.

GOOD work if you can get it, right? The second-largest quarterly profit ever reported by a U.S. company was posted by Exxon Mobil on October 26, 2006. The profit number is $10.49 billion. That’s for one quarter. Four quarters in a year.

VOLKSWAGEN’S new 2007 Golf (now the Rabbit in the United States) is a great bargain in base model form. It’s a lot of car at that price point. VW should do well worldwide with the new Golf, and maybe a little better in the U.S. with new model as well, since hatchbacks are losing their negative stigma in the States. I think the name change back to the Rabbit after 20+ years of the model being called the Golf doesn’t move the needle at all in terms of appeal, but you can bet whomever pushed for the change at VW will credit the name change for any increase in sales volume in the U.S. It just couldn’t be product and pricing, it must be the name change.

PRODUCTION of the Ford Taurus has ceased after 21 years. The Taurus was the second-best selling car in Ford history with production volume of more than 7 million units, second only to the Model T. And let me add that millions more Mercury Sables (Mercury’s Taurus clone) were sold as well. It’s really a bit shameful what Ford did to the Taurus in terms of neglect. They didn’t stick a knife in it in the 90’s, but instead just put it in a corner and stopped feeding it, letting a great nameplate slowly starve to death. Ford could have used some of the immense profits generated by their truck and SUV lines in the 90’s to keep improving the Taurus and maintain the brand as the meaty middle of their car lineup, a la the Toyota Camry, Honda Accord, VW Passat, etc., and thereby kept it competitive, but of course they didn’t. Yeah, why bother? It’s amazing it lasted this long, frankly. The very last Taurus went to Truett Cathy, the founder of the Chick-fil-A restaurant chain. He credits the success of his very first store in Hapeville, GA to the fact that it was across the street from the Ford production plant that churned out the Taurus. He plans to put the sedan in the auto section in the Chick-fil-A company museum.

PSA/PUEGEOT-CITROEN has announced that they will start selling SUVs. The vehicles are sourced from Mitsubishi, their partner in the effort. The HDi diesel engines in these SUVs can run on 30% biodiesel, potentially making them the cleanest diesels in Europe. This engine was developed in a cooperative effort between Ford and Peugeot over the last few years. The Citroen model will be the C-Crosser and Peugeot will market their entry as the 4007. Projected sales are 30,000 first year.

INDIA saw approximately 1.8 million vehicles financed last year; this in a country of approximately one billion people. As recently as ten years ago, the number of auto loans was close to zero, with almost every sale done on a cash basis. Current vehicle penetration among India’s population is 6 cars per 1000 people.

CHRYSLER must cut costs by $1000 per vehicle, say executives. The guys from M-B have been wearing down a path from Stuttgart to Detroit as they huddle up with the Chrysler folks in order to see how this might happen. Tom LaSorda’s job as CEO of Chrysler is still safe for now, but the message for him is clear: Chrysler needs to decrease their cost structure sooner rather than later, or as usual, there is always someone waiting who says he can do it faster and better. And of course, this siren song always resonates with the parent company, whether it’s based in fact or not.

THE 2007 Lexus LS 460 may be the closest thing to mechanical perfection that I’ve ever experienced in a car. If you look at it in the simple context of its existence as a machine you can drive on the road, it is difficult to imagine a more complete work output. It is, however, completely soulless. It must be the most un-involving car I’ve ever driven. It is sterile. It is a perfect car for people who really don’t like cars very much, but sill need/want to be seen driving around in something expensive ($71,000 and up). I’m not a fan.

HOW can Ford not be considering bringing the Ford Focus ST over from Europe? What a great little screamer! Ford says it needs to produce and sell more cars in the United States market. Here’s one that already exists and Ford happens to own it already. C’mon guys, you may be in crisis mode there in Dearborn, but crisis doesn’t necessarily mean chaos. This should be an easy decision.

CHINESE automakers seem intent on making the trip to the Detroit Auto Show. Following last year’s show appearance by Geely, Changfeng Group Co. has announced that they will show four of their vehicles at the show in Detroit in January 2007. The vehicles are two pickups and two SUVs. Changfeng currently produces only 100,000 vehicles annually, but says it will triple output within five years. They forecast sales in the United States by the end of the decade.

CHECKER produced its last Checker Marathon in 1982, but that hasn’t stopped the cars from being used still in current print ads, commercials and films. Apparently the car was such an iconic figure of urban life that the media types still want the car in their ads. The recognizable Checker was used as a taxi in almost every major city in the United States, and even well after production ceased, Checker Marathons roamed the streets for years afterward because of their noted durability. It was not unusual for a Checker to have close to a million miles on the odometer when it was finally taken out of service. As an example, the very last Checker Marathon registered on a taxi medallion in New York City was retired in 1999, seventeen years after the last Marathon rolled off the line. Most people don’t know it, but you could also buy a Checker Marathon for yourself, that is, for private use. Any color was available, in any of 4 body styles, with any amount of the options that Checker offered. Checker never sold more than 1230 in one year to “civilians” as the company categorized those buyers, and a typical year’s worth of sales to private owners was somewhere around 400 units.

RENAULT has a show car presently making the rounds named the Nepta that is just wildly extravagant and luxurious, not to mention quite attractive. Renault has lately made clear its intent to offer some models in the luxury range in the near future, and if this is their design brief, then I’m all for it.

BMW experienced a drop in sales volume in October in the U.S., as did almost every other European brand – Audi, VW, Volvo, Porsche, Jaguar, etc. As the housing market cools and property values stagnate or drop on both coasts of the country, this has a greater proportional effect on the European brands than as opposed to others since these regions are where a lot of their customers live. Only Mercedes bucked the trend with a healthy 12% sales increase over same time last year.

YOU read about the plan to bring diminutive Smart cars to the States and probably assumed that that everything was all wrapped up in terms of operating agreements, etc. But it wasn’t. It just got done on Nov. 1, with a deal being inked between United Auto Group and Smart GmbH (business unit of parent Daimler-Chrysler) that spells out everything, including launch, sales, service, parts inventories and more. The agreement states the United Auto Group will be solely responsible for picking Smart dealers in the U.S. The company has already publicly stated it plans to have no more than 50 dealers in the United States, and it plans to have all of those dealerships in densely populated areas of the country. That means the Northeast, the Mid-Atlantic, the West Coast, maybe a couple of cities in the Southeast (Miami without a doubt, maybe Atlanta), Chicago, and then it’s a guessing game. A lot of cities can make the minimum in terms of population and fail the target demographic test, i.e., Houston, Texas and Phoenix, AZ, so you could be a long ways from a Smart dealer if you’re in the middle of the country. Smart has high hopes for U.S. sales since sales in less-populated Canada have come in at twice the original projection since launch there in 2004.

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