By Mike Mello

08.30.2007

When will interesting paint schemes come back into style, beyond what is only found at car shows? Are we likely to see layered pinstripes and two or three-tone paint schemes applied to luxury sedans any time soon? It was only a couple decades ago that conversion vans flaunted complex paint jobs on the outside that matched the waterbeds and crushed velvet on their insides. Paint can be applied in a way that subtly sets your car apart or makes a major style statement. If the job is well-done, it can enhance the character of your car in a way that doesn’t always come through with the installation of a few TVs in the headrests. Here’s some photos I shot at a recent car show that range from understated to complicated.

In a world where people still complain that contemporary cars look too much alike or where commercials try to make the potential buyer feel like he or she will get noticed by driving a certain model, it makes me wonder why more car owners don’t enhance their automotive profiles with custom paint work.

Perhaps the reason that most cars live out their lives in stock colors is that custom paint work costs serious money. You can’t go cheap because cheap equals something less than paint. Cheap equals decals, which are only cool when they come from the factory. (Think 79 Pontiac Trans Am or 77 Jeep J10 with the Golden Eagle package.) Here are some classic flames that never go out of style:

But you know, there’s plenty of people throwing cash at their stereo systems and rims, so the money’s out there to be spent on paint, even if it’s not for your daily-driven commuter mobile. Some of the paint jobs seen on shows like Overhaulin’ are definite examples of what kind of custom paint many car owners might love to have cover their sheet metal. Here are some shadowy skulls that took a few minutes to find when standing five feet from this car:

Even when we see celebrity’s cars or other high-end rides, it’s rare to see custom paint work that involves pinstriping or deep, layered effects. Perhaps it’s just the times we’re in where drivers would prefer to almost blend in and limit their color choices to highly-polished single tones.

Thankfully, that’s not route that the owner of this 75 ElCamino chose. Of course the paint work here is from a time gone by; more of the lowrider flavor, but imagine a variation on this theme applied to late-model Cadillac CTS. With the right color choices and patterns, a CTS’ angular panels could be just the right place for a new take on this complex application of paint.

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You can read Part 3 HERE

By Jerry Weber

08.28.2007

Walter P. Chrysler (1875-1940) would never live up to the fame of his contemporary Henry Ford.

Chrysler, was a Midwesterner, whose family name, the German “Kreissler”, was anglicized to Chrysler. Walter by nature understood anything mechanical. He rose through the railroad industry to become president of the American Locomotive Co in Pittsburgh; from there he switched to cars and successfully reinvigorated the Buick division for GM before going on to run both the Willys & Maxwell automobile companies.

Walter took a page from GM in that he bought an existing car company. In 1924 he secured the necessary investors and bought Maxwell, and introduced his Chrysler automobile (a Maxwell with Chrysler’s name). He surrounded himself with good engineers like Carl Breer, Owen Skelton, & Fred Zeder. Unlike Henry Ford, he was always open to new ideas.

Chrysler either invented, or, was the first to use on popular-priced cars, things like: high-compression engines, hydraulic brakes, steel bodies, etc. He knew that America was awash with numerous auto makers in the Twenties and he had to break through with better, more innovative products to succeed. He bought the Dodge Brothers auto company and introduced Plymouth ( a low priced car) in 1928 ; In 1929 he added DeSoto, and Imperial. So Chrysler went through the Depression with a full line of cars to match GM & Ford.

However, like any other automobile company, mistakes were occasionally made. In 1934 the Company introduced the Chrysler Airflow as an art deco, modern look into the future. It was aerodynamic, all-steel-bodied, and different from anything else in America. So, of course it failed. It was too far-out for most Americans and it failed. However, this was not fatal, and Chrysler, unlike so many auto companies, actually made it through the Thirties in relatively good shape due to the popularity and superiority of its other products.

Walter Chrysler died in 1940 before America’s entry into WW II and his company went on to make many of the armaments America went to war with against the Axis Powers. To name just some: The Sherman & Pershing tanks, The ¾ ton truck & ambulance, B-29 bomber engines, and even diffusers for the Manhattan (atomic bomb) project. It wasn’t until after WW II that financial trouble came to Chrysler.

The post-war era started out fine for Chrysler, which was now under the helm of K.T. Keller, who had left GM in 1926 and then served as President under Chrysler in the late 1930’s. You must remember that all cars sold well to a product-starved America after WWII. Auto companies just took their last pre-war models and re-issued them for the 1946-47 model years. However, everyone was readying something new for the new decade to come.

Here, Chrysler was caught flat-footed against Ford & GM. GM had their new torpedo low-slung look with some fighter plane fins courtesy of Harley Earl, Ford had a low-slung rounded body for their new 1948 products. Chrysler, under Chairman Keller, stayed conservative in the styling of their cars. The bodies were high and square, the flathead six cylinder engines underpowered and the fluid drive transmission was, well, slow. If you were a customer that wanted a slow, smooth car, you could buy a six-cylinder Chrysler Windsor with fluid drive (semi-automatic transmission). A GM eight-cylinder hydramatic (fully automatic) or a Ford V8 could (and did!) cream it. As a sage said, Chryslers of this period were to take people to the races, not do the racing. Chrysler, under K.T. Keller, was convinced that their approach to the post-war market was destined for success, and that their cars would find favor with the public soon enough. The buying public disagreed with Keller.

This downturn was the first of many up-and-down roller coaster rides Chrysler suffered through in the post-war era. Chrysler was down in 1954, back up in 1957 with brilliant exterior design, down in 1960, up again by 1965, and so on. Heavy losses and restructuring were usually followed with some success only to have a downturn happen again. Chrysler had quality problems in the late fifties to compound their design ups and downs. Going into the Sixties, Chrysler had to cut DeSoto (1960), as sales didn’t justify another line. The mid-60’s were reasonably good for Chrysler as their cars began to have better quality and style across the board (it was in this period that Chrysler started the five-year 50,000 mile powertrain warranty). Chrysler’s torqueflight automatic transmission became known as the best automatic of the period.

As was the case with the other domestic automakers, the 1970’s were not kind to Chrysler. In fact, they had it worse than Ford and GM, ending the decade nearly bankrupt. The EPA was mandating lower emissions during this period and Chrysler’s engine management systems, intended to help the company meet the new emissions requirements, misfired and performed poorly. Further, Chrysler had the same heavy load of large V8’s and gas-drinkers that their competitors had. The public shunned Chrysler and to make matters worse, the old quality issues were back. It looked bleak for them by the late Seventies. In fact, to hide the lack of sales, Chrysler would build out models and store them all over Detroit without any orders (this was the notorious sales bank). After the lots were overflowing, they would attempt to fire-sale them to the dealers in packages (buy 6 and get a special deal on all of them). Chrysler resale values plummeted, a problem that would resurface again later, as would the “sales bank”.

Along comes Lee Iacocca, the spurned, scorned and fired former President of Ford, to the rescue in 1979. Iacocca had a large contingent of loyal executives who followed him to Chrysler from Ford. As Iacocca would write, if he had known just how bad a shape Chrysler was in, he might have stayed home. However, once on board, he was determined to turn a virtually bankrupt enterprise around.

With an unprecedented $1.5 billion USD in loan guarantees from the US government, give-backs from the unions, and Iococca’s instinct for putting the right bets on strategic products, Chrysler got new life.

First, the K Car showed up in 1981 – a square, roomy, front-wheel-drive compact that became the basis for much of Chrysler’s whole line in the 80’s. Taking a page from what he knew, Iacocca, who at Ford made Mustangs from Falcons and Mark III Lincolns from Thunderbirds, had Chrysler make just about every type of car off the basic K car you could imagine. He had the basic Plymouth Reliants and Dodge Aries stretched to become Chrysler Lebarons and New Yorkers, and in the mid-80’s, stretched even more to conjure up a mini-limousine. The cars actually were fairly reliable and comfortable, if not overly stylish.

But the zenith of all of these efforts was to take this platform and invent in 1984 the minivan, an entirely new type of vehicle. It has been said correctly that Iacocca didn’t invent the minivan as the Chrysler design people had it under development when he came to Chrysler. However, the new CEO saw the potential enormity of this vehicle, and pushed it to production as quickly as he could.

In other management directives, Iacocca eliminated the dreaded “sales bank” of unordered cars. His minions scoured through the Chrysler operations and forced efficiencies that didn’t exist before in a loosely-run Chrysler. He bought AMC in 1987, just to get Jeep, really, as he had no SUV-type vehicle to market. All of these decisions gave Chrysler a new start in the 1980’s.

In the early Nineties, Iacocca was being prodded to turn over Chrysler to a new CEO. He still had enormous clout with the board and for whatever reasons did not select any of his underlings at Chrysler. It was Iacocca who allowed the selection to go to an outsider from GM, Bob Eaton. This caused bad blood within Chrysler as people like Bob Lutz and others bolted for other companies. Worse to come, after retiring, Iococca linked up with Kirk Kerkorian, the famous corporate raider, and attempted to take control of Chrysler through a hostile takeover.

When this failed, it was Bob Eaton, who, fearing more hostile coups, began negotiations with Jurgen Schrempf, the CEO of Daimler Benz. This came at a time when the remaining car companies were all looking for strategic alignments as many auto industry analysts said there would only be five or six major manufacturers in the world in the 21st century. Everyone wanted to make certain they were big enough to survive the wave of consolidation in the industry.

So Daimler bought Chrysler for 36 billion dollars in 1998. This became a bad marriage where everyone lost, or, at least thought they did. Eaton was not an equal with Schrempf as it was first proclaimed when the deal was done, and soon left the new company. And Chrysler was hardly the equal of the German part of the alliance, either, which had also been publicly declared when the deal was struck. Iacocca and much of the press lamented the “takeover” by a foreign car company. And the Daimler execs anguished over the fact, that they, as the builder of prestige cars, were now involved with a mediocre mass-market car company. They believed to transfer Mercedes technology to Chrysler would diminish their own iconic brand. The chemistry went bad on both sides soon after the champagne was popped in 1998. An exodus of Chrysler engineers and designers occurred and the reputation that Chrysler had for being the small, nimble company that could bring out cutting-edge new products in a short time frame was severely diminished. Worse, the old up-and-down business cycles Chrysler had suffered through for many decades returned in the early 2000’s with a vengeance.

Things went down after the takeover, went back up when Dieter Zetsche came from Germany to give direction to Chrysler, and went back down in the mid 2000’s when Zetsche was pushed back to Germany to run a now-struggling Mercedes. This after Jurgen Schrempf, CEO of DaimlerChrysler lost his job over the negative repercussions of the merger/acquisition and was forced out for his corporate sins.

Zetsche appointed Tom LaSorda to operate Chrysler while he attempted to right Mercedes. LaSorda immediately got hit with a lulu of a product/marketplace mismatch. Like the other domestic automakers, Chrysler had too many trucks and SUVs for an economy that wanted more efficient products. Back came the reviled “sales bank” as product was parked all over Detroit, and losses were soon to follow. Worse, Chrysler, after a hit with the new 300 sedan, began firing duds as many of their new cars were DOA in the marketplace. The new 2007 Chrysler Sebring was a prime example of the mistakes Chrysler made in their car lines after the wonderful 300. It looked like a mish-mash of different cars; every enthusiast magazine review said it didn’t measure up to the competition and excoriated the car in different ways, and a lot of Sebring production headed straight to rental fleet limbo. The ones sold through the retail dealers only went over the curb with the help of hefty rebates.By 2007, the Germans had enough of the roller coaster. While publicly saying they would once again “fix” Chrysler just as they had addressed their own quality problems back in Stuttgart, they really were looking for some way out. Cerberus Capital Management, L.P. was the way they would escape. To give you some idea of what dumping Chrysler meant to the investors, the moment the mention of selling Chrysler became public, the Daimler stock skyrocketed. In other words, if the 36 billion dollars were to be left behind, but Mercedes escapes the union and retreats back to their position before the merger, it would all be worth it in the eyes of the market. Thus in August of 2007, Mercedes relinquished control and gave up an 80.1% interest in Chrysler (See story HERE). In fact, they more or less paid Cerberus to tow Chrysler away.

The new Chrysler starts again with a new CEO. Surprisingly, Cerberus goes to auto industry outsider Bob Nardelli, the ex-CEO of Home Depot to right the ship. There is little to go on so far with only a couple of weeks of new management. However, due to the fact that Cerberus is a capital management company and not an auto company, all bets are off as to what could happen.
Think about the fact that both Ford and GM have sold and mortgaged everything they previously owned to keep their core car business afloat. Both are reluctant to cut loose anything relating to domestic cars and trucks, because they view the car business as reason for their existence. Cerberus, on the other hand, has no such affinity to the car business, or any other business, for that matter. Chrysler will either produce, or some parts or all of it will be gone. This resolution will happen long before the last bit of money from Cerberus is poured into the enterprise. It’s not that a holding company is evil or bears malice; it’s that their commitment is to conserve and/or increase capital. If Chrysler starts contributing to this Cerberus goal, they may have a long-term future.

Neither the Ford family or the GM execs have other investments to turn to if what they are doing turns out badly. Thus, I believe both of these old companies will fight to the end to maintain themselves as intact car companies.

Cerbrus is wired differently, and will protect its capital if a real downturn or reverse occurs with Chrysler. Chrysler is an asset that needs to produce income, pure and simple. Just because Chrysler makes cars and trucks means nothing to Cerberus; there is no romance or special meaning to what Chrysler does as far as Cerberus is concerned. And despite the statements he’s made since he got his new job, about how much he really, really loves cars, you have to assume that Bob Nardelli feels the same way – to him, Chrysler is a problem that needs to be solved in a cold, clinical way without a lot of extra emotion attached to this process. Obviously, this was a major part of his appeal to Cerberus.

I hope it goes well for Chrysler. But if I had to choose who will not make it as an independent car company in the future, I would have to pick Chrysler. I don’t think Mercedes would have cut Chrysler loose if they had the remotest hope for a long-term and permanent recovery. Remember, they had already invested the $36 billion. Turning Chrysler around and justifying this huge amount of cash invested would have been in their best interest. Yet, after looking at all options and what they thought the future would hold, they walked, and that scares me for the future of Chrysler.

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Drop continues a general 20-year trend

By Brendan Moore

08.27.2007

The average turnover rate at new-car dealerships in the United States has dropped from 48% in 2005 to 42% in 2006, according to the folks at NADA (National Automobile Dealers Association).

Just by way of comparison, the (voluntary) turnover rate across all jobs in the U.S. is about 23% nationwide.

The average turnover rate among salespeople has dropped dramatically if viewed over the last 20 years, even though there are sometimes there are increases or plateaus in certain years. The average sales personnel turnover at franchised dealers has been as high as 85% in the past. If you were buying new cars 20 years ago, you can probably attest to the high turnover rate among salespeople – it was not unusual to go to a high-volume dealership six months after visiting the first time, and not seeing anyone you recognized on the showroom floor during the second visit.

Paul Taylor, NADA chief economist, says that dealership sales force turnover tends to decrease as overall sales slow down, with more people staying put wherever they’re at since the grass doesn’t necessarily look greener at another dealership in times of overall auto industry sales declines. Auto sales in 2006 fell 2.6% from 2005 sales figures.

The NADA also says that larger dealerships tend to have lower churn rates among their salespeople than small dealerships because they can keep salespeople happier in down sales cycles by simply spending more marketing money.

The NADA says that American new-car dealers spent a combined $7.8 billion (USD) in 2006. That’s the advertising the dealers paid for; it is exclusive of the money the manufacturers spent on brand and model advertising nationally. The NADA says that’s a 2% increase from 2005 and represents an average $590 advertising cost borne by the dealer per new car sold. The average new-car dealership in the U.S. spends $364,610 on advertising for their new car sales department. A large dealership in a major metro area might spend easily spend over a million dollars in the same 12-month period.

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By Chris Haak

08.27.2007

Dodge’s new midsize crossover, named Journey, was revealed this past weekend. Although the Journey shares its platform with the Sebring and Avenger, it has a much longer wheelbase to accommodate the all-important third row seat. It will reach US dealerships in the first quarter of 2008, and will be sold in Europe (where Chrysler is working to establish the Dodge brand) starting in the middle of 2008.

Before even getting into the vehicle itself, I find it interesting that so many family haulers carry names that invoke adventures/travels. Other than the 2009 Dodge Journey, Chevrolet will come to market around 2009 with its Traverse crossover. Ford already sells the Expedition (and used to sell the Excursion). Chrysler/Plymouth used to sell a Voyager minivan. Actually, of the nine synonyms for ‘journey’ in the Microsoft Word thesaurus, 33% of them are, or were, recently-sold vehicle names (Voyage[r], Expedition, and Excursion). Incidentally, Word lists six synonyms for ‘traverse,’ of which one – ‘navigat[e/or]‘ is the name of a vehicle.

The Journey is a nice looking vehicle. Certainly, it has much more attractive proportions than its platform mates, the Avenger and Sebring. The front is reminiscent of the Dodge Grand Caravan and at least looks like other Dodge products, and the profile reminds me of a Mazda CX-9 (certainly not a bad looking vehicle to emulate). The rear view is reminiscent of a Volkswagen Touareg, with horizontal taillights placed in the middle of the sides. Both front and rear overhangs appear to be fashionably short, especially considering its front wheel drive-based underpinnings.

Inside, although interior space won’t be as voluminous or useful as a Caravan’s, there are some nice family-friendly features either standard or optional, depending on the trim level chosen. The second row seats slide forward or backward to improve either second or third row passenger room, there are numerous “hidden” storage compartments under seats or in the floor, YES Essentials stain- and smell-resistant upholstery is available in all cloth seat-equipped versions (leather in standard in the top R/T model), and integrated child booster seats. From the press release photos, the interior detailing doesn’t look as impressive as some of its competitors will. Until I actually see one in person, I’ll reserve judgment on the quality of interior materials. After spending a few hours in a 2006 Dodge Magnum last weekend, I can attest that although the Magnum’s interior design is somewhat bland, most of the dash is soft-touch, and not as bad as it looks. Chrysler said early in 2007 that they were going to have a renewed commitment to interior design and materials. This vehicle may have been too far along in the development curve to receive the full benefit of that, but it’s nicer looking inside than other recent Chrysler efforts.

In terms of safety equipment, the Journey is coming to bat with everything that’s expected in an all-new family hauler: multi-stage driver and front passenger airbags, front seat-mounted airbags, three-row side curtain airbags, standard ABS, stability control, roll mitigation, an available back-up camera, and optional all-wheel drive.

Powertrain options are numerous. Since the Journey will be sold in Europe, a small 2.0 liter turbo diesel is available there only with a 6-speed Getrag DSG gearbox. US engine choices include a 173 horsepower 2.4 liter four cylinder, a 186 horsepower 2.7 liter V6, and a 235 horsepower 3.5 liter V6. The 3.5 liter comes with a six-speed automatic, while the other engines get four-speeds. Chrysler has not given an estimated curb weight, but only people who care more about fuel economy than safely merging onto the highway would select the four cylinder, because I’m guessing it will be overwhelmed by a three-row crossover’s mass. The 3.5 liter V6 is about 30-40 horsepower down on the class norm of 265-275, and that baseline might continue to increase by early 2008, but it should still have enough power to move the Journey briskly when needed.

The crossover field certainly is getting crowded. Chrysler was caught for the past few years without any viable crossovers in its Dodge lineup; hopefully they can catch onto the crossover wave and sell a few of these. They seem like a reasonably attractive, compelling package for families.

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But how much pain will there be before the payoff?

By Alex Ricciuti

08.26.2007

It’s no surprise that Ford CEO Alan Mulally wants to help save Ford’s domestic operations in their home market by bringing in more products developed in Europe. After all, Ford (along with GM) has to hear the criticism ad nauseum that they don’t have competitive products in the marketplace when they definitely do so here in Europe. So what’s the solution? Just ship ‘em over.

I have my doubts about how easy it is to do this as I’ve explained in a previous post here.

But I do understand the frustration of what Mulally has to deal with especially when he said that he’d rather lose money selling good cars than lose money selling bad ones. Ford officials speaking to the NY Times are pretty clear about this direction.

“There is very clearly now a priority around leveraging the products we have globally,” Mr. Kuzak said this week.

Derrick M. Kuzak is in charge of global product development and creating more global platforms for models to be sold in various markets as either identical or slightly varied makes perfect sense. They should have done so years ago.

The question remains, though, will this bring Ford back into profitability and will Ford be able to deal with the institutionalized structural costs such as pensions and health-care benefits which they have to bear and that drive their costs up so dearly?

Also, how do you sell those models to US consumers who still seem pathologically hooked on large vehicles and are utterly unwilling to pay higher prices to drive what they consider to be small cars?

Sales of large SUVs are down but crossovers are a growing trend. Three U.S. dollars a gallon isn’t yet driving everyone to trade in their pickups for a Yaris. Analysts consistently said for years that 3 dollars a gallon was some sort of magic number that would change the buying habits of the American consumer, but it hasn’t. So, what is it this time? 4 dollars? 5? What is the price point at which Americans will start thinking small?

Ford needs American products to satisfy the US market. If they can manage to build those cars inside a system of cost-effective global platforms, then they will succeed.

Alan Mulally came from a very tough and very punishing business; that is, commercial aircraft manufacturing. Big highs, big lows, and lots of big bets made on new products all the time. Actually, it sounds a lot like the car business, if you had to be pressed for a comparison. But still, Ford is in such a tough spot that by now it must seem to Mulally that it’s a lot harder to build cars than to build airplanes.

Alex Ricciuti is a freelance writer and automotive journalist based in Zurich, Switzerland. He writes frequently for Automotive News Europe.

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By Alex Ricciuti

08.26.2007

Most German automakers are run by engineers. Executives make their way up the corporate ladder by first building cars and then learning the business of selling them. In other European countries, the tradition varies, but most automakers are run by people who have lived and breathed the car business their whole careers. These are people who have a passion for the products they make. They don’t see them just as a means to make money. There is a lot of pride (and even more vanity) that goes into the models built by some of the world’s most identifiable brands and each automaker tries to build the best-performing, most-stylish and desirable car they can in order to out-do their competitors and not just simply outsell them. Winning the sales crown in a segment or a region is important, but it is one reason out of a universe of many reasons that drive auto companies to make the cars that they produce and sell.

US automakers are not all that different, although there has been more flexibility in bringing in CEOs and other top management from the general corporate world, whereas in most European automakers top management is cultivated within the company. Take the newly-independent Chrysler. Recently freed from its marriage to the foreign charmer from Stuttgart, Chrysler is ready to date a guy who means business – and that would be the guy who runs Cerberus Capital Management.

This article here at Portfolio magazine is a must-read for anyone trying to guess as to what Cerberus will do with Chrysler. It’s an extensive and informative piece that includes a profile of the man at the helm of the firm and leaves plenty of hints as to his intentions for Chrysler. Here’s one: In Greek mythology Cerberus was a three-headed hound who guarded the gate to Hades, making sure that once the spirits of the dead entered, they could not escape.It’s pretty clear from this article that Cerberus means business in returning Chrysler to profitability. Whether that means they’ll strip it down, increase it’s value and then sell is an open question. What seems fairly clear is that they have little romance in them for rekindling the glory of an American brand. They want to build cost-effective cars that they can sell at a profit – period. Just look at who they’ve appointed CEO. Not Wolfgang Bernhard, a car guy to the bone. But Bob Nardelli, hard-nosed former CEO of Home Depot, of all companies, known for his talent in wielding a scalpel.

The problem here is that auto companies that come to be run by business purists will not fare well. You need a little passion, even a little nuttiness, to make cars that consumers want to buy.
Purchasing a car is one of the least rational decisions consumers ever make. So much of the decision process is tied up with the image of the car and the self-image of the buyer and the coolness and desirability of the model. We’d all be driving Toyotas if that weren’t true. They people making the cars not only have to understand this in an intellectual way but also feel it themselves in an emotional sense. If you look at automobiles as if they are just another commodity then you are missing the point about the car business and what it takes to sell cars.

Ford’s CEO Mullaly doesn’t make any business sense when he muses about bringing Ford’s products from Europe to North America. GM bringing the Opel/Vauxhall Astra to the US badged as a Saturn will lose them a ton of money, especially at the current euro/dollar exchange rate. But, as Mullaly said, I’d rather lose money selling good cars than lose money selling bad ones. That’s the crux of it. You have to want to make and sell great vehicles because eventually auto journalists and consumers will catch on and then one day one of your models will catch fire. This is something no actuary can ever predict, but it happens when a designer or carmaker or irrational CEO decide to take a wild concept car to production.

I’ve been working on several stories recently which involves surveying dealers whose brands are about to be or might be sold. Jaguar, Volvo, etc. They all tell me they want the new buyers to be an established automotive company or group. They want someone who understands the car business and can maintain the appeal and mystique of the brand. This is understandable, because although dealers are all about moving the iron, it just so happens that almost all of them also love the iron, too. Just like most of the people that run the both the successful and the struggling car companies.

Alex Ricciuti is a freelance writer and automotive journalist based in Zurich, Switzerland. He writes frequently for Automotive News Europe.

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Read The Long Road Down – Part 2 HERE

By Jerry Weber

08.24.2007

Part 3

In talking about Ford, the iconic creator of our modern auto industry, I will not rehash familiar ground. I am not going to restate the saga of how Henry Ford took his floundering enterprise to the big-time by introducing mass production of a car that worked well and was built strong. I think everyone that is a reader of this site is probably familiar with that story.

Less well known is how Henry could not delegate or take things to the next higher level as easily as he could create. Therefore the Model T stayed in production a very long time (1908 through 1927) and it took Ford a year of being closed down completely to bring out its successor, the Model A. If GM wasn’t already doing annual model changes with several brands, Ford might have gotten away with the long production hiatus. But they forever lost their lead to GM in units produced during this period.

Ford Motor Co. didn’t have an easy time being Number 2.

First, Chrysler was right on their tail, emulating many of the same things that GM did. Secondly, an increasingly eccentric and obstinate Henry was still at the controls, preventing things like hydraulic brakes from going on his cars until 1939 (years after the rest of the industry made them standard). It was said of Ford’s V8’s that they could go, but couldn’t stop. This was merely one example of Ford’s personal preferences overruling engineering logic and/or marketing strategy during the decades before the war.

Ford Motor Company’s biggest nightmare was ahead, as Henry Ford was pushing 80 years old, the Second World War was approaching, and Henry didn’t like Roosevelt, Jews, or the allies America was siding with. He wrote through his own newspaper about all of these issues and became a problem for the US Government, both in the run-up to American involvement in the war, and during the war itself. The problem was that Henry Ford’s opinions about the war were colliding with the country’s needs in the area of industry mobilization. Since Ford Motor Co. was the second largest vehicle producer in the US, the country needed their production for the war effort. Additionally, Henry Ford’s day-to-day management of Ford, with active assistance by Harry Bennett, by most accounts a coarse, uneducated, violent goon that the elderly Ford had somehow decided to cede a considerable amount of authority to in the Thirties and Forties, was erratic and unreliable. The situation deteriorated to the point that President Roosevelt thought of nationalizing Ford for the duration of the war.

However, through a complicated intervention of the Ford family, old Henry was “persuaded” into retirement and Edsel Ford (the son of Henry Ford and the father of Henry Ford II, and previously marginalized by his father and Bennett) effectively took control of the company. In events now resembling a Greek tragedy, Edsel Ford died in 1943 from stomach cancer (some say the stress of setting up the massive 3,500,000 sq. ft. B-24 Liberator production line killed him) and there was no one else in the family deemed competent to take charge, other than a very young Henry II, who happened to be in the Navy at the time. The U.S. government agreed to release Henry ll from naval service to run the company. It is from this period we go into the modern post war period of the “new” Ford Motor Company.

In addition to the trouble with the US government, which young Henry was only too eager to settle by increasing profitable wartime production, there were bigger problems. It seems that Henry l left behind an out-of-control company heading for bankruptcy, as his iron-willed methods drove managers and engineers out of Ford to places like GM and Chrysler. The company was also in bad shape financially and Henry ll alone could not repair it. Unlike his grandfather, the “Deuce”, as he was called, was only too happy to recruit brain power from outside Ford to turn the behemoth around. And after summarily firing Harry Bennett in 1945, that is what Henry Ford II did, and with dispatch.

This new team of WWll vets came to Ford in 1946 and featured a group among them called the “whiz kids”, all ten of whom had worked on a Army Air Forces statistical team during the war; and that group was headed by two men named Robert McNamara (the same who would later become Sect. of Defense during Vietnam) and Arjay Miller. It was this team and Henry ll’s willingness to accept change that brought Ford back from disaster and allowed them to finally pass Chrysler and take back second place in U.S. sales. A status, by the way, that they kept from after WWll until last year, when Toyota beat them out for the No. 2 spot. The new sick man among the Big Three in the post-war auto industry would be Chrysler, not Ford, and that was enough for Henry ll even if he wasn’t Number 1 in sales.

What did Ford do with the new blood? The team is probably best remembered as the design team for the low-slung 1949 Ford, which effectively matched the post-war GM offerings. The whiz kids took only nineteen months to develop and then produce the 1949 Ford, which, while still impressive today in terms of time to market, was absolutely breathtaking at the time. It is not an exaggeration to state that the 1949 Ford saved the company. Approximately 100,000 orders for the ‘49 Ford were taken the first day it was introduced. Their F-Series trucks also would see 50 years of success (trucks, in fact, lately have produced much of the profit for Ford).

But Ford had only Mercury and Lincoln to go against Chevrolet, Pontiac, Olds, Buick, & Cadillac. This imbalance was meant to be addressed by a new product named after Henry ll’s late father, Edsel. In 1958 this new middle-class car was to be the missing link for Ford. Unfortunately for Ford, the derided styling was too different, and at the same time, 1958 was one of the recession years in the up and down cycles of the car business. All car companies’ fortunes went down but Ford lost hundreds of millions on the Edsel. By 1961 it was over and Ford was a lot poorer as a result of the experiment of launching a new division. Ford never tried it again.

But Ford was hardly clueless in the auto business. In 1961 Lincoln refreshed their perpetually money-losing line, making it totally different from Mercury, and finally, a worthy (and profitable!) competitor to Cadillac. They built the only post-war four-door convertible, the stunning Lincoln Continental. (President Kennedy was killed in one, not Lincoln’s fault; Kennedy ordered the bullet-proof dome removed for the parade in Dallas).

In 1964, a rising star named Lee Iacocca, who would become president of Ford (from my home town of Allentown, Pa), broke into the headlines with the new Mustang, a sports cars built off of the plebian Falcon platform. Ford invented the pony car segment which made millions, and built a sporty car out of an economy car chassis. It made GM and Chrysler hurry to catch up to Ford for once.

In 1965, the Ford LTD was a mid-priced luxury Ford that was advertised to “be as quiet as a Rolls on the road”. It looked good and sold well. The Thunderbird, which had been going against the Corvette since 1955, was enlarged in 1958 to become a four-place sporty coupe. While it couldn’t even come close to running with the Vettes from a performance standpoint, it sold far more units as a family-type upper-level sporty car. Even Ford’s Falcon of the 1960’s was the best-selling of all the contemporary economy cars. It wasn’t earth-shattering in engineering terms, but then Ralph Nader never wrote a book about it, either, which was a definite plus. It was not the Sixties that were unkind to Ford, it was the same 1970’s that began to derail GM that caught Ford unawares and unprepared as well.

The 1970’s saw Ford caught in the same gas crunch affecting GM and Chrysler with too many V8-powered gas-swilling cars and trucks. Here Ford also made a huge blunder. Almost as if to match GM’s reviled Vega in terms of lousiness, Ford builds an economy car called Pinto. This was a little two-door hatchback, which was a style becoming popular in the Seventies in the U.S. However, Ford Pintos had a much-publicized problem with their gas tanks exploding if rear-ended in a serious accident. Like the Corvair and the subsequent Vega from GM, Ford’s first trip down to sub-compact car land ended badly. Here the foreign competitors were at their best, and they handily beat Ford and GM. It is thought-provoking to note that after Honda brought out the CVCC engine, Lee Iacocca, then the president of Ford, was extremely interested in using the CVCC engine in the Pinto and/or the Fiesta. He also sent out feelers about selling the Honda Civic with the CVCC engine as a Ford-branded car in the States, to which Honda was apparently initially amenable, as well as the prospect of selling engines to Ford for use in the Pinto and/or Fiesta. There’s a big fat “what if” for you. But it was all academic as Henry Ford erupted in anger when he found out about Iacocca’s idea, and squashed it immediately, saying no Ford was going to have a Japanese engine in it.

As a sidebar to the Pinto debacle, Chrysler later had a little sub-compact in this period called the Omni/Horizon that actually worked fairly well and sold well. In 1979 Lee Iacocca was fired by Henry Ford from the presidency of Ford and bolted for the bankrupt Chrysler Corporation, where he had started production of the Omni/Horizon as quickly as possible.

Ford had competent managers in the 1980’s and they seemed to be staying with the concept that if you don’t make any spectacular blunders like the Edsel, you can survive and prosper. Lincoln was now legitimately challenging Cadillac, especially after the 1985 downsizing at GM. The Ford F-150 continued to out-sell Chevrolet trucks for some 25 years straight. The Mustang, after a bad period of being on the execrable Pinto chassis, was made more competitive on a Fox platform, which Ford used right up until the current model came out. And, of course, the car that made Ford in the Eighties and Nineties, the Ford Taurus, introduced in 1985 as a 1986 model. Again, like the 1949 Ford and the 1965 Mustang, it was a huge hit that turned the company’s fortunes around. For half what an Audi 5000 cost, Ford gave you a similar-sized and styled car. Taurus was the best selling car in the country until finally knocked out in the late 90’s by Toyota after a bad redesign in 1996. The futuristic Taurus of the late 90’s lost sales almost from the time the “oval” look debuted.

But the 1990’s saw Ford hit another big homerun. They brought out a very profitable car-sized SUV called the Explorer and caught the auto industry by surprise. Demand skyrocketed from the moment of introduction. The Explorer held its lead throughout the decade of the 90’s and into the 00’s. The Explorer stumbled when the Firestone tires that the factory installed failed and rollovers ensued. The allegation was that after the rollover, the roof crushed too easily on the Explorer. Firestone and Ford paid millions, and only now years later is the bitter taste gone from that nightmare. In 2000, Ford sold a peak of 445,000 Explorers, but by 2000, every foreign and domestic manufacturer had at least one SUV. Ford is currently on track to sell less than 150,000 Explorers this year. Because of the fierce competition, neither Ford nor anyone else will probably ever dominate the segment again. In fact, the current top-selling SUV in the U.S., the four-cylinder Honda CR-V, will probably sell about 200,000 units in 2007.

As for the Taurus, again, the competition is so fierce in the full-sized FWD market (as Toyota, Honda and now Hyundai continue to enlarge their cars with each model change), that Ford will probably never again have the dominance they had in the 90’s with Taurus (and its mechanical twin, the Mercury Sable).

What happened to Ford in the 90’s was a new leader, Jacques Nasser. Nasser took the billions of cash Ford made with trucks, SUVs, and cars and bought some other brands. He bought: Aston Martin, Volvo, Jaguar, Rover, and a host of other things; repair garages in England, auto internet sites, and auto-related software providers. In retrospect, this was money Ford needed to put into the rejuvination of their aging car models and developing a couple of new small cars as a viable Plan B in case gasoline became expensive. Worse, no money was made from these acquisitions; just losses of many millions, and if anything, Ford’s talent pool of executives was also stretched too thin.

Like all executives who make blunders, Nasser was soon gone and Ford enters into the new century with little cash and aging cars. This, just when the foreign competitors were ramping up to full speed with their new American plants and newly styled models.

Ford has always been a paternalistic company; much more so than the other two domestic competitors. For forty years Henry l stamped his conservative ideals on the company. Then for another forty years Henry ll played a game of not having any great exposure to losses for the Ford family and not having outsiders make the final decisions. Ford thus had become a company of the occasional “out of the park home run” followed by years of mediocre performance. It never seemed as balanced as GM. Now that the last Ford (William) has relinquished control, we start a new era for Ford. The new CEO, Alan Mulally, certainly has been given carte blanche to reinvent Ford.

Can Ford turn the corner from here? There seems to be a new look to Ford since Mulally came from Boeing last year. As CEO he has shaken up many old conventions and probably will sell the rest of Nasser’s foreign acquisitions (Jaguar, Rover and perhaps Volvo). But Ford, like GM, has lost precious time and the competitors, like water coming in from a leaking dam, are everywhere at once. My guess is that Ford can stay alive, but it won’t be anywhere near the size it once was. And it may not have all the divisions it has now, either. Ford has a new pickup truck due next year, and if fuel stays under $3.00 a gallon, the company may gain some lost momentum here. The new Mustang sells well, as do some crossovers at Ford, but the new bread-and-butter sedans have not all hit their mark. Lincoln has a raft of new products, but the Town Car is obsolete and still out there selling poorly every year with $6000 rebates.

It is hard for me to believe that the company that put us “on wheels” in America is in the straits that they are. What it teaches us is that nothing in this world is forever. Especially in business, and especially if the business is poorly managed.

Lastly, as part of the effort of trying to turn the company around, Ford has borrowed billions that will one day have to be repaid along with the interest of tens of millions they are repaying currently. This colossal debt is merely another facet of current situation of the Big 3 that also works against their survival.

Next will be the saga of Walter Chrysler and Chrysler Corporation, the last of the “Big Three”.

COPYRIGHT Autosavant.net – All Rights Reserved

By Chris Haak

08.23.2007

Continuing on a humorous, yet also pathetic road that we’ve traveled before, two of the latest Chinese knockoff vehicles have come to light, and they couldn’t be more extreme opposites. For previous coverage on this, click here.

The first is called the Shuanghuan Noble, and is almost identical to DaimlerChrysler’s Smart ForTwo. Automotive News reported that Mercedes-Benz may be filing a lawsuit to block the Noble’s sales in Germany. There are two major differences between the cars, visual similarities aside: The Smart is a two seater and starts at €9,490, while the Noble clone is a four seater and is expected to sell for just €7,000, making it the least expensive vehicle sold in Germany.

Shuanghuan Noble (above) and the real Smart ForTwo (below)

China Automobile Deutschland is the intended importer of the vehicle, and its managing director, said Klaus Schlössl said the car only “bears a resemblance to the Smart ForTwo from certain angles” and that “The cars are priced differently and are in a different class in terms of quality. There are many cars on the road today that look similar to each other.” Well, I’ll concede that they’re priced differently, and that the quality is likely going to be a strong point of differentiation, but the cars look similar from more than “certain angles.” Here’s hoping that DaimlerChrysler prevails in keeping this vehicle out of Germany.

Our next example is the Dongfeng Crazy Soldier, which looks curiously similar to the AM General Humvee favored by the US Military, and previously in vogue by “urban soldiers” in the 1990s. The vehicle was developed in cooperation with Chinese Army officials over several years, but it is now for sale to civilians in the Chinese domestic market.

The Dongfeng Crazy Soldier (above) and the real Hummer H1 (below)

Let’s see – failed crash tests, failed quality, and copycat designs. Sounds like a recipe for a successful industry, doesn’t it? I’m not saying that the Chinese auto industry will never be successful, but it’s not going to happen overnight.

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