Check Your Mirrors

Odds and Ends about Cars and the Car Business

By Brendan Moore

05.11.2008


DODGE started production of the 2008 Dodge Challenger Thursday, May 8, as the first car rolled off the production line at their plant in Brampton, Ontario. All 6400 cars slated for 2008 model production eligible for sale in the United States have already been spoken for, having been pre-sold months ago. Several hundred additional Challengers have also been pre-sold in Canada and Mexico and will be delivered to those locations in the coming months. The only question for Chrysler is, “what will happen to their 2009 production run”? The market is getting buffeted by both a drop in consumer spending and record jumps in the retail price of gasoline. The all-new 2008 Dodge Challenger top-of-the-line SRT8 shows up at Dodge dealers this soon with an MSRP of $37,995 USD. Performance targets for the all-new 2008 Dodge Challenger SRT8 include a 0–to-60 mph time in the low 5-second range, 0–to-100–to-0 mph in less than 17 seconds, a 1/4-mile elapsed time of less than 14 seconds, 60–to-0 mph braking distance of approximately 100 feet, and a skid pad performance of 0.88 g. Which is all wonderful, but let’s hope that the Challenger doesn’t turn out to be the absolutely right car at the absolutely wrong time.

TOYOTA issued a warning on earnings last week, saying that the Japanese behemoth expects it’s first annual decline in profit in seven years. Toyota is having the same problems all the other auto manufacturers are having; surging raw material prices, savage declines in new-car sales and even greater declines in trucks and SUV sales, high gas prices and a waning U.S. economy. A Japanese yen that has gained over 11% against the dollar since October 2007 is also hurting Toyota, along with the other Japanese manufacturers. However, from my point of view, Toyota has a bigger problem long-term than its current difficulties. I have noticed that Generation Y does not exhibit anywhere near the slavish devotion to Toyota that large numbers of their parents do, and this is going to cause a problem for Toyota in the coming years in the United States. Whether it’s a VW or a Chevrolet or a Hyundai, the current crop of young people are more receptive to considering another brand. With even more brands (Alfa Romeo, Fiat, Chinese and Indian brands, perhaps Peugeot, etc.) soon to show up in the States, and resurgence of the domestic car companies, this could spell real trouble for Toyota in the next decade.

AVTOVAZ, the largest car company in Russia, and soon to be in Renault’s orbit, since the French car maker is buying 25% of the Russian company, saw sales jump up 30 percent year-on-year in April 2008 to 67,000 cars, the company said in a statement last Monday. France’s Renault, which is to pay $1.17 billion USD for the 25% ownership stake, plans almost to double car production at AvtoVAZ to 1.5 million units by 2014, including Lada and Renault models. And, of course, one of the first Renault models to be produced there will be various derivatives of the wildly-popular Logan. You can expect to see a much-improved Lada rolling off the production lines there in short order as well, although AvtoVAZ released sales figures showing that they shipped out 37,400 Ladas for export first quarter, which is pretty good for Lada and represents a 15% increase over the same quarter in 2007.

RALPH NADER and about 15 of his supporters picketed outside the NHSTA headquarters in Washington, D.C. last week, ostensibly regarding pending regulations about roof-crush standards. Four-time presidential candidate and grouchy old guy Nader said of the NHSTA, “It would be better to shut it down and start over.” Nader, 74 years old, has stated in the past that he was the driving force in the formation of the NHSTA in 1966, but heaps scorn upon the agency these days. Nader says that the agency is way too cozy with the automakers and is a puppet of the Bush Administration, which cares little about consumer safety if business interests might suffer in the process of protecting the public. From the Nader for President website, posted on Friday, May 9: “Yesterday, we held a protest at the National Highway Traffic Safety Agency (NHTSA). NHTSA is the federal agency Ralph Nader brought into being more than forty years ago. It was set up to make cars safer. Instead, NHTSA has morphed into a consulting firm for the auto industry. Now, NHTSA is on the verge of issuing a rule that will deny roof crush victims their rights to seek justice and compensation. Yesterday, Ralph Nader, a group of auto safety advocates, and others gathered in the rain in front of NHTSA’s offices in southeast Washington, D.C. to protest the auto industry’s takeover of the federal auto safety.” There’s also a video of the protest on their site if you’re interested.

PROTON is still (amazingly!) a viable concern, and now they are planning to enter the Indian market. The struggling Malaysian auto manufacturer was rebuffed by Hindustan Motors of India and Sonalika Group, an industrial concern, in succession concerning a joint manufacturing venture, and is now resigned to going it alone in their quest to produce cars in India. Proton has subsequently started contract talks with Argentum Motors to assemble knock-down kits in-country so as to qualify as a domestic manufacturer. Despite being thwarted on the manufacturing side, Proton is reportedly making good progress in talks with both Mahindra Group and Hero Group regarding using their respective retail and marketing networks to sell Protons.

CHERY looks to enter the EU market through a side door called Turkey. On April 22, the Chery Group, China’s largest vehicle manufacturer, announced that it now plans to begin production of its Kimo, Tiggo and Alia models in Turkey, in partnership with local carmaker Mermerler Group. Zhou Biren, Chery’s vice president, told the Turkish press the company is currently looking for a green field site for a new production facility, which would take 24 months from groundbreaking until the commencement of production and would have a starting capacity of 100,000 vehicles. The exact level of investment is not nailed down and is not expected to be announced until a feasibility study of potential partner Mermerler’s production facilities is completed. “Being successful in Turkey will for us be a benchmark of our success in Europe,” said Biren. “This is because Turkish customers have similar tastes to customers in the EU. For this reason, Turkey is the first step toward entering the European markets, which is our primary goal.” Well, this “primary goal” is not exactly news, but the fact that Chery now plans to start in Turkey on their maiden trip through Europe is news.

TOYOTA is raising prices on many of its Toyota and Lexus models in the U.S. The company’s costs have increased considerably as of late and the new pricing will reflect that reality. The price increases, which will start in the middle of May, include a hike of $200 on the 2008 Yaris sedan, boosting the cost of the base model to $12,425, with higher prices for models with extra features. The 2009 Camry will go up $200, to $18,920 for a model without any extras, the automaker’s U.S. unit said in a statement released Friday. The base hybrid Camry, introduced as a 2007 model in late 2006, will cost $300 more, at $25,650, Toyota said. Toyota is also raising the U.S. prices of some Lexus luxury models. For example, the price of the Lexus IS 350 entry sports sedan will rise $300 to $36,305. The pricing of the 2008 Lexus IS F high-performance sports sedan won’t change, Toyota said.

CHRYSLER is not high on the list of favorite auto manufacturers for the Union of Concerned Scientists (UCS) organization. UCS calls Chrysler’s recently-announced gas-price-freeze promotion an attempt to fool consumers into buying one of their poor fuel-efficient vehicles. Well, yeah. That is the goal. But, as we pointed out in our article about the program, its not a bad deal if you really truly believe that the price of gasoline will drop precipitously again in a few years, and, you want to buy something now that gets 12 mpg. It’s not a great deal, but its not a bad deal. Of course, if the price of gas keeps rising, as almost everyone believes now, then it sure doesn’t make much sense long-term. Here’s what UCS has to say: “Chrysler is trying to pull a fast one on potential car buyers. It’s using this cynical deal to distract consumers from the fact that its cars get poor gas mileage. Rather than sticking customers with gas guzzlers, Chrysler should focus on delivering more miles per gallon. That would not only save their customers money at the pump, it would help cut America’s oil addiction and reduce global warming pollution at the same time. At the current price of $3.61 a gallon, the buyer of an average Chrysler vehicle would save $400 a year under Chrysler’s deal. But a mere 3-mpg boost would yield the same savings over the 15,000 miles per year typically driven in the first three years of ownership. Over the lifetime of a vehicle, such a fuel economy increase would save drivers more than $3,000. It wouldn’t stop saving drivers money after just three years. “Instead of gambling with Chrysler on the price of gas over the next three years, car buyers should go with the certainty of a fuel-efficient vehicle.”

CONTINENTAL thinks it has a good shot at getting the contract to supply the battery packs for GM’s upcoming Volt plug-in hybrid. The battery and electrics manufacturer sees the contract as a marquee opportunity for their technology and is going after the Volt business hard. According to a Reuters article on the same subject, what with rising oil prices and heightened environmental concerns driving demand for electric cars, Continental sees the contract to supply the crucial component for the highly anticipated Volt as a major milestone, Wennemer said. “It is not going to be decisive for the future of our battery unit, but it would be very, very important for us to be the one,” Wennemer said of the contract for the Volt, which is expected to go into production in 2010. “We think we have a good chance,” he said. GM is currently testing two competing battery packs for use in the Volt, one supplied by Continental, using battery cells developed by Massachusetts-based A123 Systems, and the other supplied by a division of Korea’s LG Chem Ltd.

COPYRIGHT Autosavant.net – All Rights Reserved

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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3 Comments

  1. I don’t think that the people that will want to buy Challengers are going to care too much about gas mileage or the price of gas. They know what they’re getting into right off the bat.

  2. People in America don’t even know who Chery is, but I’m willing to bet they will soon enough. First the Japanese, then the Koreans. Now the Chinese will use those two as a template for expanision in the U.S., and do it in a much shorter time. The domestics must be wondering if the pain will ever stop.

  3. musclecars4ever, there are people that can oly afford one car and that’s the car they use for pleasure, commuting, carrying the family around, etc. You better believe the price of gasoline affects those people’s decision about what to buy.

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