Check Your Mirrors

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.

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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